Financial Survey: General Electric (GE) and Koninklijke Philips (PHG)

General Electric (NYSE: GE) and Koninklijke Philips (NYSE:PHG) are both large-cap multi-sector conglomerates companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, profitability, institutional ownership, risk, analyst recommendations and earnings.

Dividends

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General Electric pays an annual dividend of $0.48 per share and has a dividend yield of 3.6%. Koninklijke Philips pays an annual dividend of $0.73 per share and has a dividend yield of 1.8%. General Electric pays out 45.7% of its earnings in the form of a dividend. Koninklijke Philips pays out 58.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. General Electric is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares General Electric and Koninklijke Philips’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
General Electric -4.74% 11.60% 2.60%
Koninklijke Philips 8.68% 6.93% 3.11%

Institutional & Insider Ownership

56.3% of General Electric shares are owned by institutional investors. Comparatively, 6.8% of Koninklijke Philips shares are owned by institutional investors. 1.1% of General Electric shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

General Electric has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Koninklijke Philips has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for General Electric and Koninklijke Philips, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Electric 5 12 3 0 1.90
Koninklijke Philips 0 5 3 0 2.38

General Electric presently has a consensus target price of $17.59, suggesting a potential upside of 33.49%. Koninklijke Philips has a consensus target price of $37.00, suggesting a potential downside of 6.42%. Given General Electric’s higher probable upside, equities analysts clearly believe General Electric is more favorable than Koninklijke Philips.

Earnings and Valuation

This table compares General Electric and Koninklijke Philips’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
General Electric $122.09 billion 0.94 -$5.79 billion $1.05 12.55
Koninklijke Philips $20.08 billion 1.82 $1.87 billion $1.24 31.89

Koninklijke Philips has lower revenue, but higher earnings than General Electric. General Electric is trading at a lower price-to-earnings ratio than Koninklijke Philips, indicating that it is currently the more affordable of the two stocks.

Summary

Koninklijke Philips beats General Electric on 8 of the 15 factors compared between the two stocks.

About General Electric

General Electric Company operates as a digital industrial company worldwide. It operates through Power, Renewable Energy, Oil & Gas, Aviation, Healthcare, Transportation, Lighting, and Capital segments. The Power segment offers technologies, solutions, and services related to energy production, including gas and steam turbines, engines, generators, and high voltage equipment; and power generation services and digital solutions. The Renewable Energy segment provides wind turbine platforms, and hardware and software; offshore wind turbines; solutions, products, and services to hydropower industry; and blades for onshore and offshore wind turbines. The Oil & Gas segment offers oilfield services, oilfield equipment, turbomachinery and process solutions, and digital solutions. The Aviation segment provides jet engines and turboprops; maintenance, component repair, and overhaul services, as well as replacement parts; and additive machines, materials, and engineering services. The Healthcare segment offers diagnostic imaging and clinical systems; products, services, and manufacturing solutions for drug discovery, the biopharmaceutical industry, and cellular and gene therapy technologies; and medical technologies, software, analytics, cloud solutions, and implementation and services. The Transportation segment provides freight and passenger locomotives, and rail and support advisory services; parts, integrated software solutions, and data analytics; software-enabled solutions; mining equipment and services; and marine diesel and stationary power diesel engines and motors, as well as overhaul, repair and upgrade, and wreck repair services. The Lighting segment offers light emitting diode products; and energy efficiency and productivity solutions. The Capital segment provides industrial and energy financial services; and commercial aircraft leasing, financing, and consulting services. General Electric Company was founded in 1892 and is headquartered in Boston, Massachusetts.

About Koninklijke Philips

Koninklijke Philips N.V. is the Netherlands-based health technology company. The Company’s segments include Personal Health businesses, Diagnosis & Treatment businesses, Connected Care & Health Informatics businesses, HealthTech Other and Legacy Items. The Personal Health businesses segment is engaged in the health continuum, delivering integrated, connected solutions that support healthier lifestyles and those living with chronic disease. The Diagnosis & Treatment businesses segment delivers precision medicine and treatment, and therapy. The Connected Care & Health Informatics businesses segment provides consumers, care givers and clinicians with digital solutions that facilitate care by enabling precision medicine and population health management. The HealthTech Other segment comprises such items, as innovation, emerging businesses, royalties, among others. The Legacy Items segment consists mainly of separation costs, legacy legal items, legacy pension costs, among others.

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