Why Should People Invest in General Electronics Corporation - Case Study Example

Case for the Stock Name Institutional affiliation Why should people invest in your stock? General Electronics Corporation Overview Investment Case General Electronics is a leading manufacturing multinational company headquartered in Boston specialized in the production of electronics, communication devices, and office technologies. The In recent years, the company has been growing dynamically financially and technologically. The primary objective of the company is to offer quality products to their market segments as well as the creation of consumers' value. General Electronics was the first company to venture in different industries specifically in electronic, home appliances, Furniture, transport and communication. The company positions its products in different market segments depending on consumers’ needs and the level of competition. Today, General Electronics is one of the best sellers of the play stations, smart phones electronic and communication devices on the globe. In the stock market, General Electronics is one of the companies that have been dominating in New York Stock Exchange (NYSE) since he was first listing in the 1930s. General Electronics has some outlets and offices across the world managed and owned by the Company. From this perspective, the company operates under different governmental legal entities. Unlike other multinational corporations with independent financial departments, General Electronics has a consolidated financial statement prepared annually. Investment Case Stocks are equity investment in a company the business representing the shareholder's ownership rights specifically organizational assets and earnings. Overall, General Electronics is an industrial leader in electronics. General Electronics has been growing dynamically across the market segments. The Company has been receiving global wards due to quality products and services. In 2016, General Electronics was among the best winners of the companies with best electronic designs in the world. The company's financial situation is steady, and it will continue improving as new technologies continue to pave into the manufacturing industries. In comparison to the previous year, the current financial status indicates that the company's profit margin went from 3.15 percent to 4.65 percent (between mid-2015 and mid-2016). However, General Electronics’ financial health needs an improvement despite facing stiff competition. The company has been recovering from previous economic downfall specifically between the year 2008 and 2009 when the company total sales declined by over 20 percent. The current examination indicates that General Electronics stock price has risen from previous year $ 19.23 percent to $ 22.16 percent signifying total satisfaction to the shareholders in spite of the stock market recession (GE 2015 Annual Report). Additionally, General Electronics financial statements between 2014 and 2015 fiscal years show that the Company accumulated gross profit of $18.3 billion. In this aspect, the company provides perfect financial performance where investors can gain significant returns on investments. There are some factors the company has put into consideration in the past few years. In our business, the shareholders have voting rights, but they earn their dividends occasionally about the enterprise's profitability. Today, people are willing to invest in the industry due to promising financial performance. Firstly, General Electronics has been publishing annual journals projecting the company’s past and present financial performance in different market segments; the company deals with both fiscal and nonfinancial investments. In this aspect, presentation of the business's financial status to the targeted investors aims to display the organizational transparency and strategies of the company’s future. In modern times, investors are not willing to risk their assets to unprofitable and dishonest companies. In this aspect, most of the investors’ associate stock investments with the Company’s financial activities and how they share the dividends among the shareholders. Additionally, investment funds come from the company's assets and shareholders contribution, and therefore, failing to demonstrate sequential financial accumulation of the company might hinder investors from stocking in the enterprise. Economic also has become the main driving force for General Electronics. The General Electronics Company has excellent economic conductions specifically in a financial market where many investors are looking deposit their money. The core business of the company in the financial arena is to discover emerging investing opportunities for the benefits of the long-term shareholders and the targeted new investors. In this aspect, General Electronics administration and are well informed and ready to address the financial risks to investors. In modern times, the company's stock price and volume have been in aligning with the current national and international economic conditions. Sector Outlook Return analysis In the past two years, General Electronics has an accumulated a capital gain of over 84.3 percent in the year 2016. This year, the company has collected over 600 percent gross profit. The gains accumulated from massive volume sales of play station and deduction of production of General Electronics communication devices. However, the financial performance of General Electronics is lower than companies like General Electric Company, Emerson Electric Company, and Samsung who are the primary and close competitors. The company is looking forward to improving the purchase of its assets to meet the culminating shareholder's demands. In recent years, General Electronics has been receiving few investors due to the past Company's financial crisis. The company is investing shareholders in investing in the company due to its current and expected future dynamic growth specifically in the stock exchange market. The current managing director has said the management would continue evaluating General Electronics’ outlook for forecast investment purposes. Comparative Analysis The analysis below represents a comparative analysis of General Electronics Company in comparison to other company’s competing in the stock market. The report compares General Electronics stock position with close competitors: 2015 2014 2013 2012 2011 Market Value $28 Million $38 Million $13 Million $8Million $7Million Growth Rate -4.34 % 8 % 63 % 94% 95% Fundamental Analysis Revenue analysis General Electric’s operates in more than 150 countries in the world specifically in Australia, North and South America, Europe, and Central Asia. Additionally, General Electronics participates in different industries where each GE Company within an industry contributes to revenue generation. The company is growing dynamically across the market segments and shortly GE will begin operations in Africa targeting South Africa and Nigeria. Concerning income distribution, North America generates the highest percentage of the total revenue amounting to 53 percent, followed by South America 22 percent, Europe 10 percent, Australia 8 percent and Asia 7 percent. General Electronic income margin is higher compared to the competitors in various industries. The recent financial statistic of General Electric is indicating that the company’s revenue has accumulated more than 63 percent since the year 2011 specifically in the United States. In the fiscal year of 2015, the GE branches in the US generated around 103 billion dollars in revenue. GE remains to be the largest firm in the US with the highest revenue volume. The chart below indicates General Electric five years revenue generation (2012-2013): Financially, General Electronics financial performance is high, and the trend is improving steadily, and the management expectation is that the company will reach highest revenue bid of 95 percent by the end of the fiscal year 2020. In the last five fiscal years, the total revenue of General Electronics grew at an average of 23 percent across all industries giving the company high bid in the stock exchange. Despite the previous stagnated growth, the company is looking forward to open new factories and retail shops; might venture into new market segments as an avenue of increasing revenue in future. General Electronics revenue is likely to hit an approximate of $4 billion by the end of 2020. Additionally, the investment industry within the General Electronics is growing dynamically in all production sectors. Risk Analysis Risk analyses are technological activities that organizational managers use to evaluate the company’s operations. General Electronics operates in different industries and markets, and hence, the company is vulnerable to various risks. To manage risks, the Company has management controls, operational and production control systems. There are four risk factors bound to General Electronics: financial, legal entities, compliance, and strategic planning. The company has been mitigating all these risks through various departments. General Electronics management controls aim to protect the company's management systems, which are vulnerable to environmental dynamics. General Electronics board of directors delegate responsibilities to managers in various outlets, and these branch managers should give the reports annually. Financial risk focuses on mitigating economic vulnerabilities the company faces across the market segments. Foreign currencies exchange rates and interest rates are some of the risks that the corporation aims to mitigate for they have a direct impact on the costs of the goods the company. Apart from foreign currency, the company has credit risks from customers who fail to remove their debt on time and contractual obligation. General Electronics operates in more than 150 countries around the world. In this aspect, the company exposure to legal entities is very high. The legal entities add production costs to the company due to high taxation rates through exportation of raw materials, labor and finished goods to the foreign countries translating to high commodity prices. However, General Electronic commits and adheres to governmental regulatory policies. Employability laws, tax procedures and operational licensing are some of the universal administrative, legal frameworks. Operational risks involve business external and internal dynamics that affects General Electronics production processes. General Electronics has provided differentiated products in various market segments. Strategic risks include challenges General Electric when executing both short-term and long-term objectives. The demand for the Company's products is increasing at a high rate. As the demand increases, the Company is prone to the global economy, social and political factors. The company's long-term strategy is to dominate the market share by 50 percent in spite of facing stiff competition. Joint ventures merge, and acquisitions are significant policies General Electronics uses to penetrate into global markets. Finally, the company offers unique, inimitable products and services to all segments. SWOT Analysis Strengths -The Company operates in different market segments. General Electronics forms alliances with global companies through acquisition, merger and joint ventures making the company to gain high volume. The GE Company has a global reputation provision of quality products and services, accumulating market share and high profit margin. The company employs high-qualified workers with a culture of manufacturing quality products and offering quality services to the clients. Moreover, the company has strong leadership structure with a capacity of executing organizational objectives. Weaknesses- poor performance in Asian markets especially in electronic and home appliances products. Prices of the commodities are usually small. Production culture is wanting. Opportunities- Should focus on opening new market segments in Africa. Merger and joint venture small businesses in Asia market to expand the market segment. Exploit technological and natural resources to develop and improve production. For sustainability purposes, the company should embrace research and development models. Threats- Consumers’ purchasing behaviors are unpredictable. Stiff competition across market segments especially in the pricing of the commodities. General Electronic is listed is one of the major pollution contributors in the planet. New companies are entering various industries stiffening competition. Conclusion The current revenue generation at General Electronics prospects growth story of the enterprise. Despite facing stiff competition, global economic downturn and risks factors, General Electronics earnings has been growing at an average of 26 percent annually. Over the past five years, General Electronic has undergone dramatic financial growth accumulating a profit margin of 15 percent annually, and over the next five years, the margin will hit 18 percent. General Electronic is the company that global investors are looking forward to investing in due to promising dividend returns from the assets. Reference GE 2015 Annual Report, 2015. Retrieved from www.ge.com/ar2015/assets/pdf/GE_AR15.pdf (Accessed on December 8, 2016). Read More