Executive Summary
Rating: HOLD | GE
GE’s investment case is anchored in strong cash generation and premium profitability, but the valuation already discounts much of that quality. TTM operating margin is 20.2%, net margin is 17.9%, and return on equity is 45.4%, while leverage remains elevated at 116.5% debt/equity and the stock trades at 40.4x trailing P/E and 31.4x EV/EBITDA. The main risk is that the current 1.0x current ratio leaves limited liquidity cushion if working capital tightens. The near-term catalyst is continued conversion of revenue into earnings and free cash flow, which would need to justify the premium multiple.
Investment Rating
Rating: HOLD
GE screens expensive relative to its earnings and cash flow profile. The stock trades at 40.4x trailing P/E, 37.4x forward P/E, 7.2x EV/Revenue, and 31.4x EV/EBITDA. That valuation is supported by 20.2% TTM operating margin, 17.9% TTM net margin, and 45.4% TTM ROE, but leverage of 116.5% debt/equity and a 1.0x current ratio limit downside protection. The rating reflects a business with strong profitability, but one where the market is already paying for it.
Company Profile
GE is an industrial company with operations spanning aviation, healthcare, and power. It generates revenue through equipment sales, services, and long-cycle installed-base support, with recurring aftermarket activity an important contributor to earnings quality. The company’s scale, global customer relationships, and installed equipment base support a broad commercial footprint across commercial and defense end markets.
Economic Moat
Business Model
GE’s moat is built less on exclusivity than on installed-base economics and service intensity. The company sells complex industrial systems that create long-lived customer relationships, then monetizes those assets through maintenance, parts, and upgrades. That model supports recurring revenue and helps stabilize margins through the cycle. The combination of large-scale engineering, certification requirements, and switching costs in mission-critical applications makes displacement difficult, especially where customers value reliability and lifecycle support over upfront price.
Risk Factors
High severity: leverage is elevated at 116.5% debt/equity, and total debt stands at $21,321.0 million, which increases sensitivity to any slowdown in cash conversion.
Medium severity: the current ratio is 1.0x, leaving only a narrow short-term liquidity buffer if working capital needs rise.
Medium severity: the stock’s 40.4x trailing P/E and 31.4x EV/EBITDA leave limited room for execution disappointment.
Management Discussion & Analysis
Management appears focused on maintaining margin discipline while continuing to convert earnings into cash. The reported TTM operating margin of 20.2% and levered free cash flow of $5,668.0 million suggest the company is prioritizing balance-sheet flexibility and capital efficiency. The key message from the available data is not aggressive top-line expansion, but rather sustained profitability and cash generation at a premium valuation.
Recent Earnings
The latest quarter shows a sequential step down in scale and earnings. Revenue was $12,392.0 million in 2026-03-31, down from $12,717.0 million in 2025-12-31, while net income fell to $1,904.0 million from $2,541.0 million. The swing in net income has no clear driver identified in the available documentation; investors should seek further disclosure. On a year-over-year basis, revenue rose from $9,934.0 million in 2025-03-31 to $12,392.0 million in 2026-03-31, indicating continued growth despite the sequential moderation.
Financial Analysis
Growth
GE — Financial Growth (Quarterly, USD Mil)
Source: Yahoo Finance — Quarterly Financial Statements
| Metric | 2025-03-31 | 2025-06-30 | 2025-09-30 | 2025-12-31 | 2026-03-31 |
|---|---|---|---|---|---|
| REVENUE (USD Mil) | 9,934.000 | 11,022.000 | 12,181.000 | 12,717.000 | 12,392.000 |
| EBIT (USD Mil) | 2,455.000 | 2,547.000 | 2,740.000 | 3,101.000 | 2,593.000 |
| EBITDA (USD Mil) | 2,754.000 | 2,858.000 | 3,043.000 | 3,408.000 | 2,905.000 |
| NET INCOME (USD Mil) | 1,978.000 | 2,028.000 | 2,157.000 | 2,541.000 | 1,904.000 |
| DILUTED EPS | 1.830 | 1.890 | 2.020 | 2.400 | 1.810 |
Revenue increased from $9,934.0 million in 2025-03-31 to $12,392.0 million in 2026-03-31. EBIT rose from $2,455.0 million to $2,593.0 million over the same period, while EBITDA increased from $2,754.0 million to $2,905.0 million. Net income moved from $1,978.0 million to $1,904.0 million, and diluted EPS was 1.8 in both 2025-03-31 and 2026-03-31. The key takeaway is that revenue growth has outpaced earnings growth in the latest year, suggesting some margin normalization after the stronger 2025-12-31 quarter.
Profitability
GE — Profitability (TTM)
Source: Yahoo Finance — Trailing Twelve Months (TTM)
| Metric | TTM |
|---|---|
| Operating Margin (TTM) | 0.202 |
| Net Margin (TTM) | 0.179 |
| Return on Assets (TTM) | 0.049 |
| Return on Equity (TTM) | 0.454 |
TTM operating margin is 20.2%, net margin is 17.9%, return on assets is 4.9%, and return on equity is 45.4%. Those figures indicate a business that is converting revenue into profit efficiently and generating a high return on equity despite a capital-intensive industrial structure. The main point for investors is that profitability is already strong, so the debate shifts to sustainability rather than turnaround.
Valuation
GE — Valuation Multiples
Source: Yahoo Finance
| Metric | Value |
|---|---|
| Market Cap (USD Mil) | 339,663.651 |
| Enterprise Value (USD Mil) | 346,976.322 |
| Trailing P/E | 40.384 |
| Forward P/E | 37.425 |
| Price/Sales (TTM) | 7.030 |
| Price/Book (mrq) | 18.254 |
| EV/Revenue | 7.182 |
| EV/EBITDA | 31.438 |
| Beta (5Y Monthly) | 1.375 |
GE trades at 40.4x trailing P/E, 37.4x forward P/E, 7.0x price/sales, 18.3x price/book, 7.2x EV/Revenue, and 31.4x EV/EBITDA. Market capitalization is $339,663.7 million and enterprise value is $346,976.3 million. Beta is 1.4x, which reinforces that the stock is not a low-volatility defensive name. The valuation implies investors are paying for durable earnings quality and continued cash generation.
Leverage
GE — Leverage & Coverage (Quarterly)
Source: Yahoo Finance — Quarterly Financial Statements
| Metric | Value |
|---|---|
| Total Debt/Equity % (mrq) | 116.527 |
| Current Ratio (mrq) | 1.008 |
| Total Debt (mrq, USD Mil) | 21,321.001 |
| Operating Cash Flow (TTM, USD Mil) | 8,851.000 |
| Levered Free Cash Flow (TTM, USD Mil) | 5,668.000 |
Total debt/equity is 116.5%, total debt is $21,321.0 million, and the current ratio is 1.0x. Operating cash flow is $8,851.0 million on a TTM basis, and levered free cash flow is $5,668.0 million. That cash generation supports the balance sheet, but the leverage profile still leaves the company exposed if operating performance softens or working capital absorbs more cash.
Comparable Analysis
GE’s 24.7% revenue growth is above Boeing at 14.0%, General Dynamics at 10.3%, RTX at 8.7%, Honeywell at 2.4%, and Lockheed Martin at 0.3%. On profitability, GE’s 20.2% operating margin exceeds Boeing at 1.7%, Honeywell at 21.0%, General Dynamics at 10.5%, RTX at 13.2%, and Lockheed Martin at 11.0%, while its 45.4% ROE is above Honeywell at 24.3%, General Dynamics at 18.0%, RTX at 11.6%, and Lockheed Martin at 67.6%. On leverage, GE’s 116.5% debt/equity is below Boeing at 828.7%, Honeywell at 257.4%, and Lockheed Martin at 276.4%, but above General Dynamics at 37.7% and RTX at 57.2%. Valuation remains rich versus the group, with GE at 40.4x trailing P/E and 31.4x EV/EBITDA.
Growth
| Company | Revenue TTM (USD Mil) | Revenue Growth YoY % | EBITDA TTM (USD Mil) | Diluted EPS TTM |
|---|---|---|---|---|
| GE | 48,313.000 | 0.247 | 11,037.000 | 8.050 |
| BA | 92,184.000 | 0.140 | -3,259.000 | 2.530 |
| HON | 37,660.000 | 0.024 | 8,526.000 | 6.270 |
| GD | 53,808.000 | 0.103 | 6,487.000 | 15.880 |
| RTX | 90,373.000 | 0.087 | 15,263.000 | 5.320 |
| LMT | 75,106.000 | 0.003 | 7,995.000 | 20.650 |
Valuation
| Company | Trailing P/E | Forward P/E | EV/Revenue | EV/EBITDA | Price/Sales (TTM) | Price/Book (mrq) | Market Cap (USD Mil) | Enterprise Value (USD Mil) | Beta (5Y Monthly) |
|---|---|---|---|---|---|---|---|---|---|
| GE | 40.384 | 37.425 | 7.182 | 31.438 | 7.030 | 18.254 | 339,663.650 | 346,976.320 | 1.375 |
| BA | 84.656 | 51.222 | 2.166 | -61.262 | 1.832 | 28.215 | 168,838.590 | 199,652.250 | 1.198 |
| HON | 34.188 | 18.702 | 4.266 | 18.842 | 3.607 | 9.995 | 135,829.880 | 160,645.730 | 0.843 |
| GD | 21.668 | 18.962 | 1.825 | 15.141 | 1.729 | 3.563 | 93,052.320 | 98,218.110 | 0.341 |
| RTX | 34.075 | 23.916 | 3.037 | 17.983 | 2.701 | 3.683 | 244,126.760 | 274,469.450 | 0.306 |
| LMT | 25.425 | 16.361 | 1.847 | 17.350 | 1.612 | 16.124 | 121,050.510 | 138,712.220 | 0.106 |
Profitability
| Company | Operating Margin (TTM) | Net Margin (TTM) | Return on Assets (TTM) | Return on Equity (TTM) |
|---|---|---|---|---|
| GE | 0.202 | 0.179 | 0.049 | 0.454 |
| BA | 0.017 | 0.025 | -0.021 | 1.699 |
| HON | 0.210 | 0.109 | 0.060 | 0.243 |
| GD | 0.105 | 0.081 | 0.060 | 0.180 |
| RTX | 0.132 | 0.080 | 0.041 | 0.116 |
| LMT | 0.110 | 0.064 | 0.072 | 0.676 |
Leverage
| Company | Total Debt/Equity % (mrq) | Current Ratio (mrq) | Total Debt (mrq, USD Mil) | Operating Cash Flow TTM (USD Mil) | Free Cash Flow TTM (USD Mil) |
|---|---|---|---|---|---|
| GE | 116.527 | 1.008 | 21,321.000 | 8,851.000 | 5,668.000 |
| BA | 828.696 | 1.176 | 49,614.000 | 2,502.000 | 2,554.250 |
| HON | 257.387 | 1.385 | 37,751.000 | 5,161.000 | 2,936.880 |
| GD | 37.701 | 1.384 | 9,832.000 | 7,412.000 | 5,289.500 |
| RTX | 57.229 | 1.024 | 38,935.000 | 11,117.000 | 7,233.380 |
| LMT | 276.365 | 1.135 | 20,697.000 | 7,368.000 | 3,987.120 |
Returns
| Company | Return on Equity (TTM) | Return on Assets (TTM) |
|---|---|---|
| GE | 0.454 | 0.049 |
| BA | 1.699 | -0.021 |
| HON | 0.243 | 0.060 |
| GD | 0.180 | 0.060 |
| RTX | 0.116 | 0.041 |
| LMT | 0.676 | 0.072 |
Source: Yahoo Finance
Conclusion
GE combines strong margins, solid cash generation, and high returns on equity, but the stock already reflects those strengths. The latest quarter showed a sequential decline in revenue and net income, and leverage remains meaningful at 116.5% debt/equity with only a 1.0x current ratio. Unless management can sustain growth while preserving margin and cash conversion, the current valuation leaves limited upside.
Data sourced from Yahoo Finance. Not investment advice.
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