Disastrous results as expected for GE

Shares of the stock are nearing 5-star territory, where we would be buyers.

Joshua Aguilar 31 October, 2018 | 5:00PM
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Joshua Aguilar: As expected, GE reported disastrous third-quarter results today. Even so, we anticipated the firm would disclose a kitchen sink of bad news. The stock is flirting with 5-star territory as the price of the stock has dropped below $10 (all amounts are in U.S. dollars). If the stock drops down to our 5-star price, at just above the midpoint between $9 and $10 per share, we would be buyers of the stock. At that price, investors would be paying for what we believe are GE's wide-moat businesses in aviation and healthcare, which cumulatively have an enterprise value of about $160 billion, could attach all of GE's foreseeable liabilities, and get the remaining portions of the business for free. Note, these businesses alone are worth more than GE's current enterprise value, and GE has the benefit of having separate market values for both oil and gas, as well as transportation. Bottom line, we’re hoping Mr. Market beats down this stock to our 5-star price so investors can enter the stock at what we believe is an attractive price point.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
General Electric Co94.99 USD-3.47Rating

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Joshua Aguilar

Joshua Aguilar  Joshua Aguilar is an equity analyst for Morningstar.

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