This Office Hour session was held on 9/29/2017 and takes a close look at near-term business conditions and profitability for General Electric. We have written extensively about GE in the past.
The total recording is around 30 minutes long, broken into smaller, more digestible bits.
This video sets out our agenda for the Office Hour Session. We have slightly changed our profitability assumptions, so plan to review our prior projections and move on to build our new ones.
Review of Prior Projections
A quick review of our prior profitability forecasts and how we got them. We’ll step through each of the Industrials business lines one-by-one and look at factors presently influencing profitability in each.
Power and Renewables Segments
Power makes up roughly 22% of GE’s 1H17 revenues and Renewables another 8%. The business drivers in these two segments are similar, so we discuss them together.
Oil & Gas
Is there a bright spot in Oil & Gas? Perhaps, but with the merger of GE’s legacy business with the business of Baker Hughes, there are a number of moving parts here as well.
This segment has its own drama associated with it.
GE has two mature and successful businesses which are in the sweet spot of product introduction cycles.
Owners’ Cash Profit Forecast
Here we look at likely near-term profits measured by OCP, given what we know about the demand environment.
The more that changes, the more that remains the same. A close look at near-term conditions convinced us that our profitability forecasts had been too high, but that so had our forecasts for investment spending. The two effects canceled one another out, and our valuation range has stayed the same.