June 24, 2012
The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes addresses topics from across the investing world.
In today's edition, Brendan discusses General Electric and the impact of the continued mess in Europe on the company. So far, GE has powered through the crisis, rising 10% this year versus the Dow's meager 3% gain. That's impressive considering GE gets almost 20% of its revenues from Europe, down from 24% four years ago, and Europe is the company's largest market outside the U.S. Many GE shareholders are worried about GE Capital's exposure to Europe, considering the unit is essentially a large bank. Good news for investors is that most of GE Capital's exposure in Europe is in the U.K., Germany, and France, countries faring better than most on the continent. Also, GE Capital's CEO said that 85% of its loans in Europe are secured by property, a nice safety blanket for shareholders.
Overall, GE has been restructuring its operations in Europe, including shifting emphasis of some of its industrial units to emerging higher-growth markets. This is a good strategy that should help GE hit is goal of double-digit growth this year. Brendan thinks that if the Europe mess continues to get worse, it could drag down GE's share price in the short term. But he would only view that as a long-term buying opportunity as the company is looking attractive even at its current valuation. Check out the video below for more insight on GE and its exposure to Europe.
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