Tuesday, February 6, 2007


For those of you that are toying between MMM and GE here is a breakdown of the two companies. (I originally posted this on a forum at www.moneysense.com)


PE: 14.5
ROA: 18.65
ROE: 37.82
Dividend Yield: 2.5
Price/Sales: 2.37
Price/Book: 5.44
2007 projected P/E: 15.7
2008 projected P/E: 14.2

-Dividend History: Paid quarterly since 1916
-60% of their revenues now come from outside the US
-Have a long history of innovation
-S&P Rating: 3 stars, Hold, $83 target price (12% upside)
-Argus Rating: Buy, $89 target price (20% upside)


PE: 18.22
ROA: 3.02
Dividend Yield: 3.09
Price/Sales: 2.29
Price/Book: 3.33
2007 projected P/E: 16.33
2008 projected P/E: 14.6

-Dividend History: Paid quarterly for over 100 years
-significant % of their revenues now come from outside the US (couldn’t find the exact number)
- S&P Rating: 5 stars, Strong Buy, $45 target price (23.5% upside)
-Argus Rating: Buy, $42 target price (15% upsside)

I’d just like to note that I like the fact that GE has clearly defined goals (8% organic growth) and is definitely moving in the right direction with their “ecomagination” concept. I don’t think it will be long until green technologies will start to really sell, and GE is taking an aggressive stance on their green (and profitable) technologies. I really like GE and plan on buying them in the future. I chose to buy 3M strictly on a valuation (and ROA, ROE) basis but I would take a serious look at GE if it pulled back another 10% or so. I would be more comfortable buying them when their forward P/E is in the 14X range. I just don’t feel that 8% organic growth deserves an 18X multiple (especially with a company as huge as GE).

(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice.)

1 comment:


GE does not bring good thing to life.