The daily drop in shares of General Electric (NYSE: GE) is consistent in a bad way but there is hope. At the beginning of March, GE fell to a yearly low of under $14 before several consecutive days of an uptrend.
Even after losing half its value, the stock is not cheap from a valuation perspective. So, what are the business drivers that will lead the conglomerate’s prospects higher?
GE may start with deep cost cuts. This is standard for any company looking to balance uncontrolled costs against falling revenue. Still, GE will need to consider asset sales concurrently with aligning its costs with revenue.
On Mar. 9, Reuters reported that GE was exploring the divestiture of its electrical engineering business. The unit is now worth half of what it paid for it and is losing money.
GE is exploring the sale of its industrial gas engine business. Other non-core units include the light bulb manufacturing business, railway locomotives, and healthcare information technology services.
According to finbox.io, GE is worth $15.50 a share, which is lower than the $18.36 average target price Wall Street assigned it. SimplyWall.st is highly bearish on GE stock.
Based on future cash flow, which is declining sharply, GE is worth under $10 a share. Which is it? Short-term, selling on GE stock is slowing. That is a start.
