Summary
GE shares recently slid to their lowest level in almost 10 years on the back of more disappointing news.
Despite the appointment of a new CEO, negative sentiment could persist.
Based on an earnings perspective, it's even possible that shares could decline into the single digits in the short term.
However, intermediate and longer-term earnings should improve, and the sum of GE's parts is worth substantially more than the current market cap implies.
Therefore, despite the near-term risk to the downside, GE's stock is likely to be substantially higher in 12-18 months.
This idea was discussed in more depth with members of my private investing community, Albright Investment Group . Get started today »
Source: GE.com
General Electric (GE) is having a great day, up by nearly 10% following the dismissal of John Flannery, and the appointment of a new CEO, Larry Culp. However, prior to the announcement, GE shares were in a state of relentless decline. GE’s stock tumbled by about 7% just last week, as news of a GE gas turbine failure in Texas suppressed investor appetite once again. The ongoing concern is that GE’s Power unit will continue to struggle, and the company may not make its EPS target range of $1-$1.07 for the full year.
However, the sum of GE’s businesses represents significantly more value than the company’s current market cap implies, and longer term, GE’s profitability should improve notably in coming years. Thus, despite potential for lower prices in the short term, in the intermediate to longer term, the stock should go significantly higher.
