GE’s Gains Energy Market Share on Tech Initiatives, R&D Efforts

November 8th, 2011 by Trefis Team
+16.27%
Upside
169
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Trefis
GE: GE Aerospace logo
GE
GE Aerospace

General Electric’s (NYSE:GE) market share in the global energy-related products market, which includes solar and wind energy, has started to recover from the economic crisis which greatly impacted its operations in the U.S., where it is the largest supplier of energy-related equipment. The company has also been witnessing strong competition internationally, particularly from Chinese manufacturers such as Sinovel Wind Group and Goldwind in the wind turbine market. GE also operates in the solar industry with companies such as First Solar (NASDAQ:FSLR), SunPower (NASDAQ:SPWRA) and Suntech Power (NYSE:STP). Backed by scale, technological advancement and brand presence, we expect GE’s energy division market share to improve in the coming years.

Our complete analysis for General Electric’s stock is here.

GE’s Diverse Product Portfolio, R&D Efforts

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GE offers a diverse set of equipment and services across the entire energy sector such as gas turbines, wind and solar energy, water technology and distributed power generation technologies. GE continues to invest in market-leading technology and services. As part of the U.S. Dept of Energy’s Sunshot initiative, GE is working to make “solar photovoltaic (PV) systems on rooftops more affordable for home owners.” [1]

Internationally, GE has recently debuted its 2.75 megawatt wind turbine technology in Scotland. This technology is developed to suit a variety of wind regimes, and is the latest in the company’s portfolio of multi-megawatt wind turbines. [2]

Historically, the company has invested 4-5% of segment revenue into research and development. The company’s strong existing portfolio, and commitment to producing the most technologically advanced products should allow for market share growth.

GE’s Global Presence in Developed & Emerging Economies

GE has a significant presence across the globe. The company’s presence in growing markets such as Asia makes the company well-positioned to capture a large share of equipment and service orders coming from these regions.

In March 2011, GE signed a memorandum of understanding (MoU) with Vietnam’s National Power Transmission Corporation (NPT) whereby “both companies will work together to increase Vietnam’s power transmission efficiency and expertise and reduce the risk of power shortage.” [3]

While we estimate that General Electric’s energy division market share will increase from an estimated 13.2% in 2012 to 14% by the end of our forecast period, Trefis members project an increase from 14.5% in 2012 to 17.2% during the same period. The member estimates imply an upside of 6% to the Trefis price estimate for GE’s stock.

We currently have a Trefis price estimate of $20 for General Electric’s stock, about 20% above the current market price.

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Notes:
  1. GE Working to Cut Solar Installation Costs in Half, Make Rooftop Solar More Affordable, Press Release, Oct 26, 2011 [↩]
  2. GE Marks Northern European Debut of 2.75 Megawatt Wind Turbine Technology in Scotland, Press Release, Oct 26, 2011 [↩]
  3. Vietnam Increasing Power Efficiency & Reliability with GE’s Proven Fixed Series Compensation Solutions, Press Release, Aug 2011 [↩]