In-Depth Analysis: General Electric Versus Competitors In Industrial Conglomerates Industry

In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating General Electric GE against its key competitors in the Industrial Conglomerates industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.

General Electric Background

GE was formed through the combination of two companies in 1892, including one with historical ties to American inventor Thomas Edison. Today, GE is a global leader in air travel and in the energy transition. The company is known for its differentiated technology and its massive industrial installed base of equipment sprawled throughout the world. That installed base most notably includes aerospace engines, gas and steam turbines, and onshore and offshore wind turbines. GE earns most of its profits on the service revenue of that equipment, which is generally higher-margin. The company is led by Danaher alumnus Larry Culp, who is leading GE through a breakup of its businesses.

When analyzing General Electric, the following trends become evident:

• The current Price to Earnings ratio of 18.36 is 1.31x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 5.82 which exceeds the industry average by 1.34x.

• With a relatively high Price to Sales ratio of 2.37, which is 1.17x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 5.68% is 0.47% above the industry average, highlighting efficient use of equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.84 Billion, which is 2.24x above the industry average, indicating stronger profitability and robust cash flow generation.

• The company has higher gross profit of $5.03 Billion, which indicates 2.68x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company is experiencing remarkable revenue growth, with a rate of 15.43%, outperforming the industry average of 9.06%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When assessing General Electric against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• When evaluating the debt-to-equity ratio, General Electric is in the middle position among its top 4 peers.

• The company maintains a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.84, suggesting a relatively balanced financial structure.

Key Takeaways

For the valuation analysis of General Electric in the Industrial Conglomerates industry, the PE, PB, and PS ratios indicate that the company's valuation is high compared to its peers. This suggests that investors are willing to pay a premium for General Electric's earnings, book value, and sales. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth ratios indicate that General Electric is performing well in terms of profitability and growth compared to its industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.