The Greatest Comeback Story of All Time
For all intents and purposes, GE hit an all-time high this year, the first in around 24 years, and it has a lot to do with the spinoffs of three companies (GE Aerospace (GE), GE Vernova (GEV), and GE
For all intents and purposes, GE hit an all-time high this year, the first in around 24 years, and it has a lot to do with the spinoffs of three companies (GE Aerospace (GE), GE Vernova (GEV), and GE Healthcare (GEHC)).
This is a catch-up to modernization in specialization. GE was one of the last standing conglomerates that became too diversified and lost focus on the long term, focusing too much on quarter-to-quarter financial engineering.
At its lows, some of the separate operating companies inside of GE were worth about 50 cents on the dollar when inside GE versus on their own.
The three separate companies are all expected to deliver better long-term earnings results as a result of the split and refocus on their core businesses.
They’ve also authorized $15 billion of share buybacks and reinstated a dividend of 30% of net income to shareholders.
Currently, the stock trades for around 39x forward earnings, which is high and could be a drag on the price going forward. However, if they are able to execute earnings and revenue growth, they could continue a long legacy that extends back to the invention of the lightbulb.
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