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Michael S.

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  • Michael S. commented on CanadianValue's article 10-08 14:33
    GE Has Been an Absolute Failure in Allocating Capital – Bill Ackman
    Bill Ackman (Trades, Portfolio) isn't too worried about hurting feelings at General Electric (GE). When asked about the giant American company...
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    Michael S. 10-08 15:33
    • To Kdt34wqx -

      GE Industrials earnings have been growing at +11% per year for the last 3 years.  They are estimated to get even better at up to +15% per year by 2018.

      Analysts forecast that total GE earnings will be $1.80 in 2017 and Peltz estimates total earnings at $2.20 in 2018.

      I disagree strongly with your statement "there won't be any growth for GE shareholders anytime soon".  GE shareholders will see an increased dividend starting with the Dec-16 announcement.....possibly to the $1.00 level (from the current $0.92 level).....and more important, a higher forward P/E ratio up to 18.....which it is at today......FPE was 16 just a week ago.

      With this higher FPE, the stock price in Dec-17 (2 years out) would reasonably be expected to be at  18  X  $2.20  X  0.90  =  35.6  where $2.20 are the estimated earnings for 2018 and 0.90 is a factor I've put in since estimates almost always decline over time.

      The stock price 35.6  is a 25% INCREASE above today's close.  I consider both the stock increase and rising dividend to be significant growth for GE shareholders.

      For full disclosure, I am long GE and will continue to be as the stock gets up into the 30's and higher.
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