What's threatening GE?

Our moat downgrade was prompted by secular threats facing GE power and lingering liabilities at GE capital.

Joshua Aguilar 20 July, 2018 | 5:00PM
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Josh Aguilar: We recently downgraded General Electric's moat to narrow from wide. The way we differentiate between a wide moat and narrow moat comes down to our confidence in excess returns. When we assign a firm a wide moat, we're saying we have very high confidence that a company will achieve normalized excess returns over the next decade, and more likely than not over the next 20 years. By contrast, with narrow-moat-rated firms, we're still saying we think it's more likely than not a company can clear that 10-year hurdle, but we don't have that same high degree of confidence we do with wide-moat-rated firms. What ultimately affects our visibility into the future with GE really are two main factors: secular threats facing GE Power and lingering liabilities at GE Capital.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
General Electric Co101.63 USD-0.52Rating

About Author

Joshua Aguilar

Joshua Aguilar  Joshua Aguilar is an equity analyst for Morningstar.

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