General Electric Is Worth Almost 50% More Given an Expected Sales Revival
General Electric (NYSE:GE) is likely in the middle of a turnaround, given that a number of its business lines are starting to get a post-Covid boost. Therefore, I suspect its second quarter earnings and free cash flow (FCF) will see a significant jump. This could have a big effect on GE stock.
When I wrote about General Electric in May, I said the stock was worth at least $17 per share. I now think it could be worth much more. I estimate that GE stock could see an upside of almost 50% from its July 21 price of $13.09, or $19.54 per share.
What GE Stock Is Worth
I based my last price target on the company’s statement that it expects industrial FCF to range between $2.5 billion and $4.5 billion. I now think its FCF could reach about $6 billion since analysts tracked by Seeking Alpha expect 2022 revenue will rise to $81.87 billion. This implies that its FCF margin will rise to about 7.3%.
Using a 3.5% FCF yield, we can estimate that the market value will rise to $171.4 billion. That is 49.3% over its current market capitalization of $114.82 billion. In other words, GE stock is worth about $19.54, or 49.3% more than its price of $13.09 on July 21.