GE - Embedded Expectations Analysis - 2018 09 05
General Electric Company (GE:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 24.9x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about costs, pricing pressures, and weak market demandSpecifically, management may be concerned about their ability to meet their target of $25bn in asset reductions over the next two years in GE Capital, and to meet their goal of $2bn reductions in 2018. Moreover, they may be concerned about continued weakness in free cash flow, as well as the sustainability of recent service orders growth. Additionally, they may be concerned about their ability to execute on their plan to drive shareholder value by focusing on portfolio growth, delevering and derisking, and operating in a new decentralized manner. They may also lack confidence in their ability to make the corporate center smaller and more efficient, and to mitigate the effects of tariffs on their markets in China. Moreover, they may lack confidence in their investments in the Aviation segment and Arcam, and in their ability to execute on the high backlog for Renewables. Finally, they may be concerned about continued weakness in shipping profiles across Aviation, Power, and Renewables segments, and continued price pressures across equipment in their markets, particularly Renewables
General Electric is a technology industrial company. The company's segments include: Power, which serves power generation, industrial, government and other customers with products and services related to energy production; Renewable Energy, which engineers and manufactures energy equipment and projects, grid solutions and digital services; Aviation, which designs and produces commercial and military aircraft engines, digital components, electric power and mechanical aircraft systems; Healthcare, which provides healthcare technologies; and Capital, which provides financial products and services that build on the company's industry capabilities in aviation, power, renewables, healthcare and other activities.
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