General Electric Company (GE): An Insider’s Holding Company Bought 10,000 Shares

GE’s peers include Siemens AG (ADR) (NYSE:SI), Koninklijke Philips Electronics NV (ADR) (NYSE:PHG), Honeywell International Inc. (NYSE:HON), and United Technologies Corporation (NYSE:UTX). All four of these companies are valued between 11 and 13 times their forward earnings estimates, placing General Electric Company (NYSE:GE) in the middle of this peer group on that basis. All four also reach that level through significant earnings growth from where things currently stand, so the sell-side has similar expectations for all five businesses. We’d note that in the case of Philips and Siemens earnings growth would be a reversal of recent results, as those two companies each reported a double-digit percentage decline in net income in their most recent quarter compared to the same period in the previous fiscal year. Honeywell is actually in a similar position to GE, with all of its earnings growth coming through an increase in the company’s net margin. United Technologies reported better numbers on both top and bottom lines in Q1 versus a year earlier, but the revenue growth was caused by an acquisition and so likely wouldn’t be repeated in the core business going forward.

Value investors, in our view, shouldn’t be paying too much attention to this peer group at this time. The earnings multiples are not very high, but are high enough that we’d want to expect sustainable earnings growth over the next several years and we don’t see that at GE or the other companies. More research into General Electric Company (NYSE:GE) might be worthwhile, however, for income investors who favor blue-chip businesses.

Disclosure: I own no shares of any stocks mentioned in this article.