General Electric Co. Net Income surged on 244% in 2016 and EBITDA Margin decreased slightly on 0.99 pp from 10.4% to 9.4%
20 Jan 2017 • About General Electric Co. (
$GEC) • By InTwits
General Electric Co. reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- General Electric Co. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.7%. At the same time it's a lot of higher than industry average of 4.4%.
- CAPEX is quite volatile: 7,199 in 2016, 7,309 in 2015, 7,134 in 2014, 13,458 in 2013, 15,119 in 2012
- The company has potentially unprofitable business model: ROIC is at 2.4%
- It operates with high leverage: Net Debt/EBITDA is 7.8x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
General Electric Co. ($GEC) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 144,121 | 142,937 | 116,406 | 115,158 | 119,687 | 3.9% |
| Gross Profit | 55,358 | 53,853 | 28,534 | 27,559 | 25,617 | -7.0% |
| SG&A | | | 16,848 | 17,831 | 18,377 | 3.1% |
| EBITDA | 24,821 | 23,654 | 15,524 | 11,967 | 11,255 | -5.9% |
| Net Income | 13,641 | 13,057 | 15,233 | -6,126 | 8,831 | -244.2% |
Balance Sheet
|
|---|
| Cash | 77,268 | 88,555 | 70,025 | 70,483 | 48,129 | -31.7% |
| Short Term Debt | 101,392 | 77,890 | 70,425 | 49,860 | 30,714 | -38.4% |
| Long Term Debt | 236,084 | 221,665 | 186,596 | 147,742 | 105,497 | -28.6% |
Cash flow
|
|---|
| Capex | 15,119 | 13,458 | 7,134 | 7,309 | 7,199 | -1.5% |
Ratios
|
|---|
| Revenue growth | 1.3% | -0.8% | -18.6% | -1.1% | 3.9% | |
| EBITDA growth | -0.9% | -4.7% | -34.4% | -22.9% | -5.9% | |
| Gross Margin | 38.4% | 37.7% | 24.5% | 23.9% | 21.4% | -2.5% |
| EBITDA Margin | 17.2% | 16.5% | 13.3% | 10.4% | 9.4% | -1.0% |
| Net Income Margin | 9.5% | 9.1% | 13.1% | -5.3% | 7.4% | 12.7% |
| SG&A, % of revenue | | | 14.5% | 15.5% | 15.4% | -0.1% |
| CAPEX, % of revenue | 10.5% | 9.4% | 6.1% | 6.3% | 6.0% | -0.3% |
| ROIC | 3.2% | 3.1% | 2.5% | 2.0% | 2.4% | 0.4% |
| ROE | 11.4% | 10.3% | 11.8% | -5.4% | 9.4% | 14.8% |
| Net Debt/EBITDA | 10.5x | 8.9x | 12.0x | 10.6x | 7.8x | -2.8x |
Revenue and profitability
The company's Revenue increased on 3.9% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.1 pp from 11.5% to 13.6% in 2016.
Gross Margin decreased on 2.5 pp from 23.9% to 21.4% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign surged on 12.7 pp from -5.3% to 7.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 General Electric Co. had CAPEX/Revenue of 6.0%. CAPEX/Revenue decreased on 3.4 pp from 9.4% in 2013 to 6.0% in 2016. For the last three years the average CAPEX/Revenue was 6.2%.General Electric Co. maintained rich investment policy and has spent a big chunk of EBITDA (64.0%) to CAPEX.
Return on investment
The company operates at low ROIC (2.41%) and ROE (9.39%). ROIC showed almost no change in 2016. ROE surged on 14.8 pp from -5.4% to 9.4% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.8x and Debt / EBITDA is 12.1x. Net Debt / EBITDA dropped on 2.8x from 10.6x to 7.8x in 2016. Debt dropped on 31.1% in 2016 while cash dropped on 31.7% in 2016.
Valuation
General Electric Co.'s trades at EV/EBITDA 8.1x and P/E 0.3x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 22.4x with the industry average at 19.0x.
Appendix 1: Peers in General Industrials
Below you can find General Electric Co. benchmarking vs. other companies in General Industrials industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 111.1% | 52.6% | 20.3% | 17.8% | |
| Macfarlane Group ($MACF) | -1.9% | 1.4% | 6.9% | 10.0% | |
| Robinson ($RBN) | -1.6% | 10.2% | 20.3% | 3.8% | |
| Thyssenkrupp Ag ($0O1C) | | -7.2% | 6.9% | 3.8% | -8.2% |
| Coral Products ($CRU) | | -0.2% | -0.3% | 1.2% | 7.4% |
| |
|---|
| Median (9 companies) | 1.4% | 1.6% | 4.4% | 1.2% | 6.1% |
|---|
| General Electric Co. ($GEC) | | -0.8% | -18.6% | -1.1% | 3.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 58.9% | 54.4% | 56.0% | 54.5% | |
| Macfarlane Group ($MACF) | 32.0% | 31.2% | 30.9% | 31.5% | |
| Honeywell International Inc ($HON) | 24.9% | 27.4% | 28.2% | 30.7% | |
| Smurfit Kappa Group ($SKG) | 28.6% | 28.9% | 29.5% | 30.0% | |
| Coral Products ($CRU) | 22.1% | 24.6% | 23.7% | 29.6% | 33.1% |
| |
|---|
| Median (9 companies) | 24.0% | 24.6% | 25.4% | 29.6% | 22.0% |
|---|
| General Electric Co. ($GEC) | 38.4% | 37.7% | 24.5% | 23.9% | 21.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 29.5% | 29.6% | 29.2% | 25.3% | |
| Honeywell International Inc ($HON) | 13.5% | 16.6% | 16.8% | 20.0% | |
| Jardine Strategic Hldgs ($88EI) | 15.0% | 13.3% | 13.5% | 15.1% | |
| Smurfit Kappa Group ($SKG) | 13.4% | 12.8% | 12.7% | 14.3% | |
| Barloworld ($BWO) | 8.4% | 9.1% | 10.0% | 10.3% | 10.0% |
| |
|---|
| Median (9 companies) | 13.4% | 12.8% | 12.7% | 10.3% | 7.1% |
|---|
| General Electric Co. ($GEC) | 17.2% | 16.5% | 13.3% | 10.4% | 9.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 21.3% | 8.5% | 12.1% | 9.0% | |
| Smurfit Kappa Group ($SKG) | 4.3% | 4.4% | 5.3% | 5.3% | |
| Robinson ($RBN) | 4.3% | 6.0% | 3.5% | 3.7% | |
| Jardine Strategic Hldgs ($88EI) | 5.8% | 5.2% | 4.1% | 2.9% | |
| Honeywell International Inc ($HON) | 2.3% | 2.4% | 2.7% | 2.8% | |
| |
|---|
| Median (9 companies) | 4.3% | 4.4% | 2.9% | 2.8% | 3.1% |
|---|
| General Electric Co. ($GEC) | 10.5% | 9.4% | 6.1% | 6.3% | 6.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Honeywell International Inc ($HON) | 21.8% | 23.0% | 21.3% | 23.2% | |
| Press Corp ($PESD) | 21.6% | 27.1% | 24.7% | 18.9% | |
| Macfarlane Group ($MACF) | 17.9% | 22.2% | 19.0% | 17.8% | |
| Smurfit Kappa Group ($SKG) | 10.8% | 11.2% | 11.8% | 13.9% | |
| Barloworld ($BWO) | 14.0% | 13.5% | 14.1% | 12.9% | 12.8% |
| |
|---|
| Median (9 companies) | 10.8% | 11.2% | 11.8% | 12.9% | 12.7% |
|---|
| General Electric Co. ($GEC) | 3.2% | 3.1% | 2.5% | 2.0% | 2.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Coral Products ($CRU) | 1.5x | 2.9x | 3.4x | 2.7x | 2.5x |
| Smurfit Kappa Group ($SKG) | 2.9x | 2.6x | 2.7x | 2.6x | |
| Thyssenkrupp Ag ($0O1C) | 3.4x | 4.5x | 2.0x | 1.8x | 1.8x |
| Barloworld ($BWO) | 1.5x | 1.4x | 1.2x | 1.7x | 1.2x |
| Macfarlane Group ($MACF) | 1.0x | 0.8x | 1.3x | 1.3x | |
| |
|---|
| Median (9 companies) | 1.4x | 1.3x | 1.3x | 1.3x | 1.8x |
|---|
| General Electric Co. ($GEC) | 10.5x | 8.9x | 12.0x | 10.6x | 7.8x |
