Blog Introduction: General Electric was once a Dow Jones Industrial Average (DJIA) blue-chip stock. It was also a member of the original Dow Jones index created in 1896. But, it has been experiencing hard times lately and was even removed from the Dow in 2018. So, is GE stock a good investment now? Let’s take a look at the data to find out.
Blog Body:
GE’s Financials
General Electric’s financial picture is not pretty. The company has lost money in each of the last four years. In fact, it lost $12.9 billion in 2018 alone. Its revenue has also been on the decline, falling from $127.2 billion in 2016 to $117.5 billion in 2018. This trend is expected to continue, with analysts projecting that GE will bring in just $115.2 billion this year.
The company’s long-term debt is also concerning. At the end of 2018, GE had $115 billion in long-term debt on its balance sheet. To put that into perspective, that’s more than double the $50 billion in long-term debt that it carried just four years earlier. In order to try and reduce this debt, GE has been selling off assets and shedding businesses. It has also reduced its dividend payments to shareholders, which isn’t something that investors like to see.
The Future of GE Stock
Given all of this bad news, you might be wondering if there is any hope for GE stock. The answer is maybe. The company is currently in the middle of a turnaround plan under new CEO Larry Culp that involves selling off non-core businesses, reducing costs, and paying down debt. If Culp can successfully execute on this plan, it could mean good things for GE stock down the road. However, there is no guarantee that he will be successful.
Conclusion:
So, should you buy GE stock? That depends on your risk tolerance as an investor and your opinion on Culp’s turnaround plan. If you’re willing to take on some risk for the potential of rewards further down the line, then investing in GE stock might be a good option for you. But if you would prefer to invest in companies with stronger financials and more certain futures, you may want to consider other options.