GE Receives Top Rating from Guru Growth Investor Model

GE rates highest in the P/B Growth Investor model at 66%. The analysis highlights key strengths and weaknesses, impacting future investor considerations. General Electric has notable metrics in terms of book-to-market ratios but fails on several asset return indicators.

Date: 11-01-2025

AI Rating: 5

General Electric Co. (GE) Overview

In the recent report, General Electric has been evaluated using the P/B Growth Investor model developed by Partha Mohanram. The company received a rating of 66%, which, while showing potential, indicates that it is below the threshold that would attract stronger investor interest.

Key Areas Evaluated

1. Book/Market Ratio: The stock passed this criterion, which is a positive indicator for investors looking for value in growth stocks. This suggests that GE may be undervalued based on its book assets.

2. Return on Assets (ROA): GE has failed this test, indicating inefficiencies in utilizing its assets to generate profit, which may concern investors looking for strong operating performance.

3. Cash Flow from Operations to Assets: This metric also failed, further signaling concerns about the company's operational efficiency. Positive cash flow is vital for growth companies to fund expansion and investments.

4. Cash Flow from Operations to Assets vs. Return on Assets: GE passed this test. This may suggest that although the overall return on assets is low, the relationship between cash flow and asset utilization is favorable.

5. Sales Variance: The stock passed this indicator, indicating that GE has been able to maintain or grow sales over time, which is crucial for sustained growth.

6. Capital Expenditures to Assets: GE passed this metric, suggesting that the company is effectively investing in its infrastructure for future growth.

7. Advertising to Assets and Research and Development to Assets: These tests failed, which would typically raise red flags for growth investors. Weak investment in advertising and research could hinder long-term growth potential.

Overall, while GE has showcased strengths, particularly in its book-to-market ratio and sales performance, the failures in several key metrics, especially concerning asset returns and operational cash flows, may impact investor sentiment and stock price stability as they reflect potential inefficiencies.

Stocks: GE