08-14-2014, 06:26 PM
GE is one of my core holdings. I see it as a wide-moat diversified industrial that is a major player in lots of sectors I find appealing.
As for the valuation, it's probably fair but not cheap. The high yield comes from a high payout ratio rather than a low stock price. The forward P/E as shown on Finviz.com is about in line with other industrial conglomerates. However keep in mind that about 40% of GE is a bank, and banks are currently valued around 12 p/e. I believe a good comparison would be COF since they are another major credit card lender. If you factor out the financial arm, you get a slightly higher valued industrial company.
GE is in the process of spinning off its financial arm as SYF, so that last part will become a reality.
As for the valuation, it's probably fair but not cheap. The high yield comes from a high payout ratio rather than a low stock price. The forward P/E as shown on Finviz.com is about in line with other industrial conglomerates. However keep in mind that about 40% of GE is a bank, and banks are currently valued around 12 p/e. I believe a good comparison would be COF since they are another major credit card lender. If you factor out the financial arm, you get a slightly higher valued industrial company.
GE is in the process of spinning off its financial arm as SYF, so that last part will become a reality.