Today we’re going to take a look at the well-established General Electric Company (NYSE:GE). The company’s stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $15.29 at one point, and dropping to the lows of $12.83. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether General Electric’s current trading price of $13.98 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at General Electric’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in General Electric?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.46% above my intrinsic value, which means if you buy General Electric today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $13.13, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because General Electric’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will General Electric generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a relatively muted revenue growth of 0.24% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for General Electric, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in GE’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on GE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on General Electric. You can find everything you need to know about General Electric in the latest infographic research report. If you are no longer interested in General Electric, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
