General Electric Company (NYSE:GE) isn’t worth anywhere near the $20 per share that most people would value the stock at, according to one of Wall Street’s most visible pundits.
Jim Cramer told CNBC this week that in light of the company’s recent struggles, the stock should be much lower:
Cramer — whose charitable trust owns the stock — said, “GE is one of the biggest mistakes of my career.” Last month, when speculation about the dividend cut and some sort of restructuring were circulating, Cramer had said, “Rarely have I felt this stupid,” while questioning what investors should do with the stock.
“I don’t want to talk against my [investment], but I don’t know how it’s possible anyone thinks it should be worth $20,” Cramer on Monday. “There’s just a lot that’s wrong.” It should be “a 17 times earnings” stock, he added. GE said it now sees adjusted earnings for the year ahead of between $1 per share and $1.07 per share.
Cramer also noted that GE’s cash flow between $6 billion and $7 billion seems “suspect” to him. The company has been selling off business units and even slashed its quarterly dividend payout in half yesterday in order to conserve cash.
The one positive Cramer sees with GE right now is its new CEO, John Flannery. The chief executive is a no-nonsense guy, and is sober to the fact that a lot of tough decisions will have to be made to bring the company back from the dead.
General Electric Company shares were trading at $17.52 per share on Tuesday afternoon, down $1.50 (-7.89%). Year-to-date, GE has declined -43.08%, versus a 16.76% rise in the benchmark S&P 500 index during the same period.