InvestorsObserver gives General Electric Company (GE) a weak valuation score of 3 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. GE currently holds a better value than 3% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
Metrics Analysis
GE has a trailing twelve month Price to Earnings (PE) ratio of 23.4. The historical average of roughly 15 shows a poor value for GE stock as investors are paying higher share prices relative to the company's earnings. GE's high trailing PE ratio shows that the firm has been trading above its fair market value recently. Its trailing 12-month earnings per share (EPS) of 0.58 does not justify the stock's current price. However, trailing PE ratios do not factor in the company's projected growth rate, resulting in many newer firms having high PE ratios due to high growth potential enticing investors despite inadequate earnings.
GE currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 13.35. The market is currently overvaluing GE in relation to its projected growth due to the PEG ratio being above the fair market value of 1. GE's PEG comes from its forward price to earnings ratio being divided by its growth rate. Because PEG ratios include more fundamentals of a company's overall health with additional focus on the future, they are one of the most used valuation metrics by analysts.
Summary
GE' has a weak valuation at its current share price on account of a overvalued PEG ratio due to strong growth. GE's PE and PEG are worse than the market average leading to a below average valuation score.
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