The Rising Influence of Rising Affluence

[benfrankledger]

$GE - The stock is down 37% this year. That's quite an achievement in a bubbly market that's up 15%. But that doesn't make GE a bargain, and it could fall much further.

Earnings-per-share (EPS) was 89 cents in 2016, which means the trailing price-to-earnings (P/E) ratio is 22.4. Guessing GE's "normal" EPS is a tricky business. It was $2.17 in 2007, but as low as (minus) $-0.62 in 2015. This is a business lurching from crisis to restructuring, and as such, the risks are higher than usual. Working out the steady state earnings potential is a minefield.