May 2, 2018

GE – Market expectations are for a recovery in Uniform ROA, but management has concerns about revenues and costs


 

      • General Electric Company (GE:USA)currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 22.5x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about revenues and costs
      • Specifically, management may lack confidence in the sustainability of revenue improvements in their Aviation and Healthcare segments, and may be downplaying concerns about revenue declines in their Power business. Additionally, they may be exaggerating the opportunities they see to reduce costs through overhead decreases in the company overall, and may have concerns about their ability to maintain revenue growth in their Industrial segment at current levels
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