Long-established in the Industrial Products industry, General Electric Co (GE, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.26%, juxtaposed with a three-month change of 26.51%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of General Electric Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 5/10
- Growth rank: 2/10
- GF Value rank: 1/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned General Electric Co a GF Score of 60 out of 100, which signals poor future outperformance potential.
Understanding General Electric Co Business
General Electric Co, with a market cap of $149.49 billion and sales of $67.95 billion, is a global leader in air travel and in the energy transition. The company, which was formed through the combination of two companies in 1892, including one with historical ties to American inventor Thomas Edison, is known for its differentiated technology and its massive industrial installed base of equipment sprawled throughout the world. That installed base most notably includes aerospace engines, gas and steam turbines, and onshore and offshore wind turbines. GE earns most of its profits on the service revenue of that equipment, which is generally higher-margin. The company is led by Danaher alumnus Larry Culp, who is leading a multiyear turnaround of the conglomerate based on lean principles.
Profitability Breakdown
General Electric Co's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years, with figures showing a decrease from 5.71% in 2019 to 5.26% in 2023. Additionally, General Electric Co's Gross Margin has also declined over the past five years, from 28.12% in 2019 to 25.84% in 2023. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where General Electric Co seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by an average of -5.6% per year over the past three years, which underperforms worse than 84.08% of 2,752 companies in the Industrial Products industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, General Electric Co's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering General Electric Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. With a GF Score of 60, the company faces significant challenges that may hinder its ability to outperform in the future. Investors should carefully consider these factors when evaluating General Electric Co as a potential investment. For those seeking more robust investment opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
