By: Scott Davis
Following up on our piece yesterday, we have provided a PPT presentation with some more granular data/info on GE and our positive view. We include a new B/S analysis, SOTP thoughts, and DCFs on the key businesses. And some historical work on spin-offs.
We think the stock provides exceptional risk/return and an unemotional fresh look should pay off. Earnings tomorrow will be sloppy for sure and the negative news flow may linger, however the stock appears to be finding a bottom, seems to be mostly de-risked at this point. We fully understand the skepticism. This story has been nothing short of a trainwreck. But, as we said yesterday there are elements of this one that reminds us vividly of Honeywell and Tyco post their collapses. New management will need to execute on costs and the portfolio. Neither appears overly heroic. Dave Cote and Ed Breen were not exactly known as “execution” type guys when they took their jobs – but the results proved skeptics wrong. We see a similar backdrop.
GE Report Here