Competitor Analysis: Evaluating General Electric And 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.

By analyzing General Electric, we can infer the following trends:

• Notably, the current Price to Earnings ratio for this stock, 21.32, is 1.44x above the industry norm, reflecting a higher valuation relative to the industry.

• The elevated Price to Book ratio of 6.76 relative to the industry average by 1.49x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 2.75, which is 1.32x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 5.68% is 0.37% below the industry average, suggesting potential inefficiency in utilizing 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 2.73x above the industry average, indicating stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $5.03 Billion, which indicates 2.92x 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 6.62%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

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.

In light of the Debt-to-Equity ratio, a comparison between General Electric and its top 4 peers reveals the following information:

• In the context of the debt-to-equity ratio, General Electric holds a middle position among its top 4 peers.

• This indicates a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.84, which implies a relatively balanced financial structure with a reasonable debt-equity mix.

Key Takeaways

For General Electric in the Industrial Conglomerates industry, the PE, PB, and PS ratios are all high compared to peers, indicating potentially overvalued stock. The low ROE suggests lower profitability compared to industry peers. However, the high EBITDA, gross profit, and revenue growth indicate strong operational performance and growth potential within the sector.

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