Is General Electric (NYSE: GE) a Value Investment or a Value Trap? — Market Mad House

Strangely, General Electric (NYSE: GE) could be one of the best value investments around.

To explain GE is cheap; Mr. Market priced its shares at $7.61 on 10 June 2020. Yet General Electric generates enormous amounts of cash.

For example, General Electric reported an ending cash flow of $47.774 billion and an investing cash flow of $19.086 billion on 31 March 2020. Additionally, GE had $89.585 billion in cash and short-term investments on 31 March 2020.

General Electric Makes a lot of Money

Thus, GE is a cash-rich company, but it also makes a lot of money. For instance, General Electric reported a quarterly net income of $6.233 billion and a quarterly operating income of $1.654 billion on 31 March 2020.

Additionally, GE reported a quarterly common net income of $6.156 billion and a quarterly gross profit of $4.28 on the same day. Hence, General Electric can make enormous amounts of money.

However, that money can fluctuate. In fact, GE’s quarterly gross profit fell from $6.146 billion on 31 December 2019 to $4.828 billion on 31 March 2020. Moreover, the operating income fell from $2.954 billion on 31 December 2019 to $1.654 billion three months later.