Intrinsic value of General Electric - GE

Previous Close

$14.49

  Intrinsic Value

$46.17

stock screener

  Rating & Target

str. buy

+219%

Previous close

$14.49

 
Intrinsic value

$46.17

 
Up/down potential

+219%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of GE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of General Electric (GE) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.37
  14.40
  13.46
  12.61
  11.85
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
Revenue, $m
  123,692
  141,504
  160,550
  180,802
  202,232
  224,815
  248,535
  273,377
  299,337
  326,416
  354,624
  383,979
  414,504
  446,234
  479,208
  513,473
  549,084
  586,103
  624,596
  664,638
  706,310
  749,697
  794,893
  841,996
  891,110
  942,347
  995,824
  1,051,663
  1,109,995
  1,170,955
  1,234,687
Variable operating expenses, $m
 
  119,971
  135,171
  151,333
  168,435
  186,459
  205,388
  225,214
  245,931
  267,542
  290,053
  306,436
  330,797
  356,119
  382,434
  409,779
  438,199
  467,742
  498,461
  530,417
  563,673
  598,298
  634,367
  671,958
  711,154
  752,044
  794,721
  839,284
  885,835
  934,485
  985,347
Fixed operating expenses, $m
 
  8,110
  8,313
  8,520
  8,733
  8,952
  9,175
  9,405
  9,640
  9,881
  10,128
  10,381
  10,641
  10,907
  11,179
  11,459
  11,745
  12,039
  12,340
  12,649
  12,965
  13,289
  13,621
  13,962
  14,311
  14,668
  15,035
  15,411
  15,796
  16,191
  16,596
Total operating expenses, $m
  113,427
  128,081
  143,484
  159,853
  177,168
  195,411
  214,563
  234,619
  255,571
  277,423
  300,181
  316,817
  341,438
  367,026
  393,613
  421,238
  449,944
  479,781
  510,801
  543,066
  576,638
  611,587
  647,988
  685,920
  725,465
  766,712
  809,756
  854,695
  901,631
  950,676
  1,001,943
Operating income, $m
  10,265
  13,423
  17,066
  20,948
  25,063
  29,405
  33,971
  38,759
  43,766
  48,994
  54,443
  67,162
  73,067
  79,209
  85,595
  92,235
  99,140
  106,322
  113,795
  121,573
  129,672
  138,110
  146,905
  156,076
  165,646
  175,635
  186,068
  196,968
  208,363
  220,279
  232,745
EBITDA, $m
  15,262
  23,353
  27,385
  31,680
  36,232
  41,035
  46,085
  51,380
  56,916
  62,696
  68,721
  74,995
  81,523
  88,312
  95,371
  102,710
  110,341
  118,279
  126,537
  135,131
  144,081
  153,403
  163,120
  173,253
  183,824
  194,859
  206,383
  218,422
  231,007
  244,166
  257,932
Interest expense (income), $m
  5,779
  3,692
  5,002
  6,397
  7,880
  9,449
  11,103
  12,840
  14,660
  16,561
  18,544
  20,609
  22,759
  24,994
  27,318
  29,733
  32,242
  34,850
  37,561
  40,380
  43,312
  46,364
  49,541
  52,851
  56,300
  59,897
  63,649
  67,565
  71,654
  75,926
  80,390
Earnings before tax, $m
  9,030
  9,730
  12,064
  14,551
  17,183
  19,956
  22,868
  25,919
  29,107
  32,433
  35,900
  46,553
  50,308
  54,214
  58,277
  62,502
  66,898
  71,472
  76,234
  81,193
  86,360
  91,746
  97,364
  103,226
  109,346
  115,739
  122,419
  129,404
  136,709
  144,353
  152,355
Tax expense, $m
  -464
  2,627
  3,257
  3,929
  4,639
  5,388
  6,174
  6,998
  7,859
  8,757
  9,693
  12,569
  13,583
  14,638
  15,735
  16,876
  18,063
  19,298
  20,583
  21,922
  23,317
  24,771
  26,288
  27,871
  29,523
  31,249
  33,053
  34,939
  36,911
  38,975
  41,136
Net income, $m
  8,831
  7,103
  8,807
  10,622
  12,543
  14,568
  16,694
  18,921
  21,248
  23,676
  26,207
  33,983
  36,725
  39,576
  42,542
  45,627
  48,836
  52,175
  55,651
  59,271
  63,043
  66,975
  71,076
  75,355
  79,822
  84,489
  89,366
  94,465
  99,798
  105,378
  111,219

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  48,129
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  365,183
  362,830
  411,667
  463,594
  518,542
  576,450
  637,269
  700,967
  767,531
  836,965
  909,293
  984,561
  1,062,832
  1,144,190
  1,228,738
  1,316,598
  1,407,909
  1,502,828
  1,601,528
  1,704,200
  1,811,050
  1,922,300
  2,038,187
  2,158,963
  2,284,898
  2,416,275
  2,553,394
  2,696,572
  2,846,140
  3,002,449
  3,165,865
Adjusted assets (=assets-cash), $m
  317,054
  362,830
  411,667
  463,594
  518,542
  576,450
  637,269
  700,967
  767,531
  836,965
  909,293
  984,561
  1,062,832
  1,144,190
  1,228,738
  1,316,598
  1,407,909
  1,502,828
  1,601,528
  1,704,200
  1,811,050
  1,922,300
  2,038,187
  2,158,963
  2,284,898
  2,416,275
  2,553,394
  2,696,572
  2,846,140
  3,002,449
  3,165,865
Revenue / Adjusted assets
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
  0.390
Average production assets, $m
  69,423
  79,384
  90,069
  101,430
  113,452
  126,121
  139,428
  153,365
  167,928
  183,120
  198,944
  215,412
  232,537
  250,337
  268,836
  288,058
  308,036
  328,804
  350,398
  372,862
  396,240
  420,580
  445,935
  472,360
  499,913
  528,657
  558,657
  589,983
  622,707
  656,906
  692,660
Working capital, $m
  0
  -19,952
  -22,638
  -25,493
  -28,515
  -31,699
  -35,043
  -38,546
  -42,207
  -46,025
  -50,002
  -54,141
  -58,445
  -62,919
  -67,568
  -72,400
  -77,421
  -82,640
  -88,068
  -93,714
  -99,590
  -105,707
  -112,080
  -118,721
  -125,647
  -132,871
  -140,411
  -148,284
  -156,509
  -165,105
  -174,091
Total debt, $m
  136,211
  142,924
  182,775
  225,148
  269,986
  317,238
  366,866
  418,844
  473,160
  529,818
  588,838
  650,257
  714,126
  780,514
  849,505
  921,199
  995,709
  1,073,162
  1,153,702
  1,237,483
  1,324,672
  1,415,452
  1,510,015
  1,608,569
  1,711,332
  1,818,535
  1,930,425
  2,047,258
  2,169,305
  2,296,853
  2,430,200
Total liabilities, $m
  289,356
  296,069
  335,920
  378,293
  423,131
  470,383
  520,011
  571,989
  626,305
  682,963
  741,983
  803,402
  867,271
  933,659
  1,002,650
  1,074,344
  1,148,854
  1,226,307
  1,306,847
  1,390,628
  1,477,817
  1,568,597
  1,663,160
  1,761,714
  1,864,477
  1,971,680
  2,083,570
  2,200,403
  2,322,450
  2,449,998
  2,583,345
Total equity, $m
  75,827
  66,761
  75,747
  85,301
  95,412
  106,067
  117,257
  128,978
  141,226
  154,002
  167,310
  181,159
  195,561
  210,531
  226,088
  242,254
  259,055
  276,520
  294,681
  313,573
  333,233
  353,703
  375,026
  397,249
  420,421
  444,595
  469,825
  496,169
  523,690
  552,451
  582,519
Total liabilities and equity, $m
  365,183
  362,830
  411,667
  463,594
  518,543
  576,450
  637,268
  700,967
  767,531
  836,965
  909,293
  984,561
  1,062,832
  1,144,190
  1,228,738
  1,316,598
  1,407,909
  1,502,827
  1,601,528
  1,704,201
  1,811,050
  1,922,300
  2,038,186
  2,158,963
  2,284,898
  2,416,275
  2,553,395
  2,696,572
  2,846,140
  3,002,449
  3,165,864
Debt-to-equity ratio
  1.796
  2.140
  2.410
  2.640
  2.830
  2.990
  3.130
  3.250
  3.350
  3.440
  3.520
  3.590
  3.650
  3.710
  3.760
  3.800
  3.840
  3.880
  3.920
  3.950
  3.980
  4.000
  4.030
  4.050
  4.070
  4.090
  4.110
  4.130
  4.140
  4.160
  4.170
Adjusted equity ratio
  0.110
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184
  0.184

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8,831
  7,103
  8,807
  10,622
  12,543
  14,568
  16,694
  18,921
  21,248
  23,676
  26,207
  33,983
  36,725
  39,576
  42,542
  45,627
  48,836
  52,175
  55,651
  59,271
  63,043
  66,975
  71,076
  75,355
  79,822
  84,489
  89,366
  94,465
  99,798
  105,378
  111,219
Depreciation, amort., depletion, $m
  4,997
  9,930
  10,319
  10,732
  11,169
  11,630
  12,114
  12,621
  13,150
  13,703
  14,278
  7,833
  8,456
  9,103
  9,776
  10,475
  11,201
  11,956
  12,742
  13,559
  14,409
  15,294
  16,216
  17,177
  18,179
  19,224
  20,315
  21,454
  22,644
  23,887
  25,188
Funds from operations, $m
  -9,741
  17,033
  19,126
  21,354
  23,713
  26,198
  28,808
  31,541
  34,398
  37,379
  40,485
  41,816
  45,181
  48,679
  52,318
  56,102
  60,037
  64,131
  68,393
  72,830
  77,452
  82,269
  87,291
  92,532
  98,001
  103,713
  109,681
  115,919
  122,441
  129,265
  136,407
Change in working capital, $m
  -9,497
  -2,511
  -2,686
  -2,856
  -3,022
  -3,184
  -3,344
  -3,503
  -3,660
  -3,818
  -3,977
  -4,139
  -4,304
  -4,474
  -4,649
  -4,831
  -5,021
  -5,220
  -5,428
  -5,646
  -5,876
  -6,118
  -6,373
  -6,642
  -6,925
  -7,224
  -7,540
  -7,873
  -8,225
  -8,595
  -8,986
Cash from operations, $m
  -244
  19,545
  21,811
  24,210
  26,734
  29,382
  32,152
  35,044
  38,058
  41,197
  44,462
  45,955
  49,485
  53,153
  56,967
  60,933
  65,058
  69,351
  73,820
  78,476
  83,327
  88,386
  93,664
  99,173
  104,926
  110,937
  117,221
  123,792
  130,666
  137,861
  145,393
Maintenance CAPEX, $m
  0
  -2,524
  -2,887
  -3,275
  -3,688
  -4,126
  -4,586
  -5,070
  -5,577
  -6,106
  -6,659
  -7,234
  -7,833
  -8,456
  -9,103
  -9,776
  -10,475
  -11,201
  -11,956
  -12,742
  -13,559
  -14,409
  -15,294
  -16,216
  -17,177
  -18,179
  -19,224
  -20,315
  -21,454
  -22,644
  -23,887
New CAPEX, $m
  -7,199
  -9,961
  -10,685
  -11,361
  -12,022
  -12,670
  -13,307
  -13,937
  -14,563
  -15,191
  -15,825
  -16,468
  -17,125
  -17,800
  -18,498
  -19,223
  -19,978
  -20,767
  -21,595
  -22,464
  -23,378
  -24,340
  -25,355
  -26,425
  -27,553
  -28,744
  -30,000
  -31,326
  -32,724
  -34,199
  -35,754
Cash from investing activities, $m
  49,202
  -12,485
  -13,572
  -14,636
  -15,710
  -16,796
  -17,893
  -19,007
  -20,140
  -21,297
  -22,484
  -23,702
  -24,958
  -26,256
  -27,601
  -28,999
  -30,453
  -31,968
  -33,551
  -35,206
  -36,937
  -38,749
  -40,649
  -42,641
  -44,730
  -46,923
  -49,224
  -51,641
  -54,178
  -56,843
  -59,641
Free cash flow, $m
  48,958
  7,060
  8,239
  9,573
  11,024
  12,587
  14,259
  16,037
  17,918
  19,899
  21,979
  22,253
  24,527
  26,897
  29,366
  31,934
  34,605
  37,382
  40,269
  43,270
  46,391
  49,637
  53,015
  56,533
  60,196
  64,015
  67,997
  72,151
  76,488
  81,018
  85,752
Issuance/(repayment) of debt, $m
  -58,411
  37,427
  39,851
  42,373
  44,838
  47,252
  49,628
  51,978
  54,316
  56,658
  59,020
  61,418
  63,869
  66,388
  68,991
  71,694
  74,510
  77,454
  80,540
  83,781
  87,190
  90,780
  94,563
  98,554
  102,763
  107,204
  111,889
  116,833
  122,048
  127,548
  133,347
Issuance/(repurchase) of shares, $m
  -21,429
  1,246
  179
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -80,325
  38,673
  40,030
  42,373
  44,838
  47,252
  49,628
  51,978
  54,316
  56,658
  59,020
  61,418
  63,869
  66,388
  68,991
  71,694
  74,510
  77,454
  80,540
  83,781
  87,190
  90,780
  94,563
  98,554
  102,763
  107,204
  111,889
  116,833
  122,048
  127,548
  133,347
Total cash flow (excl. dividends), $m
  -32,513
  45,733
  48,270
  51,946
  55,861
  59,839
  63,887
  68,015
  72,234
  76,557
  80,999
  83,672
  88,396
  93,285
  98,357
  103,628
  109,115
  114,836
  120,809
  127,051
  133,580
  140,417
  147,579
  155,086
  162,959
  171,219
  179,886
  188,984
  198,536
  208,566
  219,099
Retained Cash Flow (-), $m
  22,446
  -8,349
  -8,986
  -9,555
  -10,110
  -10,655
  -11,191
  -11,721
  -12,248
  -12,776
  -13,308
  -13,849
  -14,402
  -14,970
  -15,557
  -16,166
  -16,801
  -17,465
  -18,161
  -18,892
  -19,660
  -20,470
  -21,323
  -22,223
  -23,172
  -24,173
  -25,230
  -26,345
  -27,521
  -28,761
  -30,069
Prev. year cash balance distribution, $m
 
  17,415
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  54,799
  39,284
  42,392
  45,751
  49,184
  52,697
  56,295
  59,986
  63,781
  67,690
  69,822
  73,994
  78,315
  82,800
  87,462
  92,314
  97,371
  102,648
  108,159
  113,920
  119,947
  126,256
  132,863
  139,787
  147,045
  154,656
  162,639
  171,015
  179,805
  189,030
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  50,693
  33,367
  32,797
  31,967
  30,755
  29,204
  27,364
  25,296
  23,061
  20,723
  17,862
  15,597
  13,399
  11,319
  9,394
  7,653
  6,115
  4,788
  3,669
  2,749
  2,011
  1,436
  998
  676
  444
  283
  175
  105
  60
  34
Current shareholders' claim on cash, %
  100
  98.7
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6

General Electric Company is a global digital industrial company. The Company's products and services range from aircraft engines, power generation, and oil and gas production equipment to medical imaging, financing and industrial products. Its segments include Power, which includes products and services related to energy production; Renewable Energy, which offers renewable power sources; Oil & Gas, including liquefied natural gas and pipelines; Aviation, which includes commercial and military aircraft engines, and integrated digital components, among others; Healthcare, which provides healthcare technologies in medical imaging, digital solutions, patient monitoring and diagnostics, and drug discovery, among others; Transportation, which is a supplier to the railroad, mining, marine, stationary power and drilling industries; Energy Connections & Lighting, which includes Energy Connections and Lighting businesses, and Capital, which is a financial services division.

FINANCIAL RATIOS  of  General Electric (GE)

Valuation Ratios
P/E Ratio 14.3
Price to Sales 1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow -519.2
Price to Free Cash Flow -17
Growth Rates
Sales Growth Rate 5.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.5%
Cap. Spend. - 3 Yr. Gr. Rate 1.3%
Financial Strength
Quick Ratio 2
Current Ratio NaN
LT Debt to Equity 139.1%
Total Debt to Equity 179.6%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 2.1%
Return On Total Capital 3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1.7%
Return On Equity 10.1%
Return On Equity - 3 Yr. Avg. 5.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 26.2%
Gross Margin - 3 Yr. Avg. 27%
EBITDA Margin 16%
EBITDA Margin - 3 Yr. Avg. 18.6%
Operating Margin 8.3%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 7.3%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 7.1%
Net Profit Margin - 3 Yr. Avg. 5%
Effective Tax Rate -5.1%
Eff/ Tax Rate - 3 Yr. Avg. 27.2%
Payout Ratio 99.7%

GE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GE stock intrinsic value calculation we used $123692 million for the last fiscal year's total revenue generated by General Electric. The default revenue input number comes from 2016 income statement of General Electric. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GE stock valuation model: a) initial revenue growth rate of 14.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.1%, whose default value for GE is calculated based on our internal credit rating of General Electric, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of General Electric.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GE stock the variable cost ratio is equal to 85.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7912 million in the base year in the intrinsic value calculation for GE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for General Electric.

Corporate tax rate of 27% is the nominal tax rate for General Electric. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GE are equal to 56.1%.

Life of production assets of 27.5 years is the average useful life of capital assets used in General Electric operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GE is equal to -14.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $75827 million for General Electric - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 8627.51 million for General Electric is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of General Electric at the current share price and the inputted number of shares is $125.0 billion.

Articles on GE

What is next for GE?

GE should put emphasis on innovation and development of new wonderful products. This is the only recipe for the company’s revival. Selling its business units will only lead to further decline.  [October 22, 2017]  read article

Sell GE before it is really too late

GE share price is just a reflection of the company’s former CEO pathetic performance. In substance, things are not going to change under his successor. It is all about the culture of “appearance first” and self-praise.  [June 16, 2017]  read article

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COMPANY NEWS

▶ GE hires new chief lawyer from Merck   [03:00PM  American City Business Journals]
▶ [$$] GE signs $1bn locomotive supply agreement with Ukraine   [Feb-22-18 10:11PM  Financial Times]
▶ Why GE May 'Grind It Out' Rather Than Deliver A Big Breakup   [05:19PM  Investor's Business Daily]
▶ Corporate Culture Sure Looks Overrated   [04:00PM  Bloomberg]
▶ Appraisal Arbitrage Is in Trouble   [10:01AM  Bloomberg]
▶ Fidelity continues to slash GE stake as others hold steady   [06:40AM  American City Business Journals]
▶ United Technologies Has Engine Fix For Grounded Airbus Jets   [04:04PM  Investor's Business Daily]
▶ GE Struggles to Keep It Real   [03:29PM  Bloomberg]
▶ Boeing CEO Is Intent on Targeted Deals   [02:50PM  Bloomberg]
▶ Top 5 Companies Owned By GE (GE)   [11:42AM  Investopedia]
▶ Uptake names former General Electric executive as president   [11:10AM  American City Business Journals]
▶ Should Boeing Buy GE Aviation?   [09:33AM  Barrons.com]
▶ Dow Drops Over 250 Points to End Six-Session Winning Streak   [Feb-20-18 07:55PM  TheStreet.com]
▶ General Electric Has Two Huge Days Coming Up   [05:07PM  TheStreet.com]
▶ GE Mulls Sale Of Gas Engines Business In Its Power Mainstay   [04:04PM  Investor's Business Daily]
▶ General Electric's latest sale plans   [03:50PM  CNBC Videos]
▶ General Electric Could Be the Next Boeing   [03:40PM  Motley Fool]
▶ 3 Under-the-Radar Stories in the Stock Market Last Week   [Feb-18-18 09:46PM  Motley Fool]
▶ [$$] General Electric's Dim Prospects   [Feb-17-18 12:01AM  Barrons.com]
▶ GE sells off part of one of its oldest businesses: Lighting   [12:40PM  American City Business Journals]
Financial statements of GE
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