Morningstar

GE Does an About-Face on Digital

We are maintaining our fair value estimate as well as our very high uncertainty rating as the narrow-moat firm creates a new digital entity.

Securities In This Article
GE Aerospace
(GE)

Narrow-moat-rated

The new company will have approximately $1.2 billion in revenue, but we are reasonably certain it will remain unprofitable for the foreseeable future. As part of the June 26 announcement regarding the intended separations of Healthcare and Baker Hughes, former CEO John Flannery said the cash drag on GE was a "significant negative number." Previously, the firm targeted no net cash drag from digital spending by 2020. Longtime followers of the company will recall that substantial portions of GE’s 2015 investor day were dedicated to Predix, which was then-CEO Jeff Immelt’s initiative to push GE into more technology-oriented offerings. San Ramon-based GE Digital, however, continued to struggle in the ensuing years.

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About the Author

Joshua Aguilar

Director
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Joshua Aguilar is a director, AM Resources, for Morningstar*. After previously covering multi-industrial conglomerates and financial services firm, he is now assuming coverage of exploration and production firms in the oil and gas industry.

Prior to joining Morningstar in 2016, Aguilar was a practicing business transactional attorney in Florida. Aguilar joined Morningstar in 2016 as an Associate on the Financials team, was promoted to Analyst on the Industrials team in 2018, and Senior Analyst in 2022. He’s also served as our Associates Coordinator since 2021 and led our diversity efforts as DEI co-chair since 2020. Aguilar has served as a key mentor to several Associates on their path to Analyst. He’s also hosted a Morningstar earnings townhall, participated in Analyzing MORN, and been a strong contributor through both client interactions and his GE stock call. Josh co-authored an Outstanding Research Achievement (ORA)-winning piece with Kris Inton on CEO compensation in 2021. He’s also taught the model to new hires for many years as part of the Valuation Committee.

Aguilar graduated Magna cum laude with a B.A. in political science and criminology from the University of Florida. He also has an MBA from Rollins College and a J.D. from Wake Forest University. Aguilar remains an active member of the Florida Bar Association.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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