Do you feel the tension in the air, steadily escalating as you approach Wall Street? It can mean only one thing: Diversified conglomerate, medical-equipment maker, and financial powerhouse -- is there anything this company doesn't do? -- General Electric
There will be plenty of time to dissect and digest the news after GE reports its Q1 numbers Friday morning. Time enough for investors to review the successes and failures of the quarter that was. But in these last few hours before Friday's news throws our opinions into a tailspin of short-term navel-gazing, let's take a moment to review what investors think about GE as a long-term investment.
Our tool in this endeavor: Motley Fool CAPS, where we poll more than 26,000 investors for their views on more than 4,000 companies, GE among them. Here's what Fools have to say about GE.
Up or down?
Nearly 2,500 investors have submitted ratings on the company. The verdict: Decidedly mixed.
Overall, nine investors out of 10 rate the company likely to outperform the market going forward. Yet when you poll the very best investors -- those designated as "All-Stars" on CAPS by virtue of their outperforming 80% of their peers -- the ratio drops to 7.5-to-1.
A small difference? Perhaps. But on CAPS, we overweight the opinions of the best investors, and discount the laggards. As a result, GE fails to earn an above-average CAPS rating, getting just three out of a possible five stars. In comparison to its peers, GE sits pretty low on the totem pole:
|
Diversified conglomerates |
CAPS rating |
|---|---|
|
Berkshire Hathaway |
***** |
|
United Technologies |
***** |
|
3M |
***** |
|
Johnson & Johnson |
**** |
|
Tyco |
**** |
|
Otter Tail |
*** |
|
GE |
*** |
Wall Street vs. Main Street
Interestingly, when you poll the investors who supposedly know the most about investing -- Wall Street analysts -- the opposite view prevails. Out of 18 analysts polled, fully 15 of them, or 83%, rate GE an outperformer. Three think it will only match the market's returns -- but there's not an analyst on Wall Street who's willing to bet GE will underperform the S&P 500.
Funny, that. Because if you examine the stock's performance over the last 52 weeks, you'll see that it has, in fact, underperformed the market by better than 10 percentage points.
Pick a side
Not sure who's right here? Wall Street, which thinks GE can't lose, or Main Street, which thinks it probably won't, but might? To help you make your decision, consider a couple of the more recent pitches posted on CAPS, both for and against GE:
Bull pitch
The top-rated pitch on CAPS -- one submitted by a highly rated All-Star investor, no less -- says you should love GE for its "great dividend" and "great profits." Whatever results GE reports on Friday, this investor thinks GE a great long-term buy, because "in times of market uncertainty... money will flow to... GE."
Bear pitch
Another All-Star begs to differ. "This is a great stock to own and a very solid company," this bear concedes, but he also objects that GE "is very large and while it will make nice returns it is not nimble enough and has historically underperformed against the broader market. That historical trend is likely to continue."
Who said that?
To learn the identities of the wise Fools who penned these words, and explore the plethora of additional financial data we've put together on the company, just click here.
3M and Berkshire Hathaway are Motley Fool Inside Value selections. Johnson & Johnson is a Motley Fool Income Investor recommendation. Otter Tail is a Motley Fool Hidden Gems pick. Try out these or any of our other Foolish newsletters free for 30 days.
Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 102 out of over 26,000 raters.
