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A Look At How General Electric Is Positioned, Financially

November 12, 2018

Summary:

- A well-known General Electric bear recently lowered his price target for GE from $10 to $6, which caused shares to drop by over 5%.

- I will take a deep dive into General Electric's Q3 2018 10-Q and provide my thoughts on how I view this conglomerate positioned from a financial standpoint.

- I am long General Electric and I plan to stay long the stock. However, GE shares may not be worthy of your investment dollars.

 

General Electric's ($GE) stock is at multi-year lows as GE shares are quickly approaching levels not seen since the Financial Crisis.

 

This storied industrial conglomerate is facing stiff headwinds related to the downturn in the Power industry but GE's management team is also contending with several self-inflicted wounds (i.e., SEC/DOJ investigations, goodwill charges, and the list goes on). As a direct result, the market is extremely bearish about the company's near-term prospects and the poor sentiment is wreaking havoc when it comes to the stock price.

It does not help that the bears are roaring louder than ever, and rightfully so. To this point, JPMorgan's Stephen Tusa released another bearish investor noteon GE and lowered his price target from $10 to $6. Mr. Tusa talked down GE's most recent earnings results but his bearish thesis largely revolved around the company's poor financial position and its liquidity.

 

Mr. Tusa has been on point with his calls on GE over the last two years, so I am not in the position to try to refute his bearish arguments in this article. Instead, I will dig into the numbers from the most recent quarterly report and provide my thoughts on where I view GE currently stands from financial standpoint.

 

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