- General Electric: the rebirth of the most iconic industrial conglomerate in the United States
- BNP Paribas: the fine that revives the spectre of legal risk
US EQUITIES
General Electric: the rebirth of the most iconic industrial conglomerate in the United States
- In September 2025, General Electric’s share price surpassed its historic high reached in 2000. On October 21, 2025, the publication of its resultsconfirmed the turnaround that began in 2018.
- Founded in 1892, General Electric is one of the oldest companies in the United States. It was one of the original members of the Dow Jones Index in 1896, then a continuous member of the index from 1907 to 2018. GE was a leading player in many technological revolutions throughout the 20th century: light bulbs, electric train engine, X-ray machines, household appliances, turbines, and more. GE also experienced stock market euphoria in 2000, fueled by its iconic CEO Jack Welch. In 2000, GE had the second-largest market capitalization in the S&P 500 after Exxon. Between 2000 and 2018, GE was a sprawling conglomerate with poor management, facing competition and depression in several of its end markets (gas turbines, electric train engine, oil equipment and services, insurance, and finance).
- When Larry Culp took over as CEO and chairman of GE in 2018, becoming the first outsider to head the group, it was burning $1.6 billion in FCF, had $39 billion in financial net debt, and had just cut its dividend by almost half. The stock was trading at a low of $32. In 2025, GE Aerospace, the leader in aircraft engines and the new name for GE following the spin-offs of GE Vernova and GE Healthcare, is expected to generate a FCF of $7 billion. Its share price has increased 9.5x in seven years and is up 82% since the beginning of the year. On October 21, 2025, GE Aerospace reported revenue of $30.5 billion and FCF of $6 billion for the first nine months of 2025, up 21% and 27% respectively.
- This publication shows that GE continues to reap the benefits of Larry Culp’s restructuring, enjoying growth in civil and military aviation, and above all the commercial success of its CFM56 and LEAP engines, co-developed with Safran, one of the most profitable industrial products in the world.
- Today, cash generation stems from mainly from the maintenance of CFM56engines installed since the early 1980s. The technical choices made by GE and Safran have proven to be more judicious than those of Pratt & Whitney (RTX group), its only competitor for modern single-aisle aircrafts. The LEAP engine dominates the engine market of the A320neo (Airbus), 737MAX(Boeing) and, in the future, COMAC’s C919(Chinese). Available since the early 2010s, the LEAP’s commercial life is expected to continue for several decades thanks to lucrative maintenance contracts. For every $1 of engine sales, GE and Safran expect $3.5 in revenue over 20 years of service. However, GE and Safran continue to invest in R&D: they are developing their next engine. It is scheduled to enter into service around 2035 and is expected to generate fuel savings of 20% compared to the LEAP.
EUROPEAN EQUITIES
BNP Paribas: the fine that revives the spectre of legal risk
- BNP Paribas was ordered by a New York jury to pay nearly $21 million in damages to three Sudanese refugees for transactions orchestrated by its Geneva office that indirectly financed Omar al-Bashir’s regime in Sudan between 2002 and 2008.
- While this decision seems to echo the huge fine ($9 billion) imposed on the group in 2014 for conducting dollar transactions with Cuba, Iran and Sudan under US embargo, the current case is at a different level of jurisdiction. The regulatory aspect related to US sanctions has been settled since 2014, but civil actions were made possible in 2019 by the US Court of Appeal and a 2024 decision allows the main complaints to proceed to trial. This is therefore no longer a criminal prosecution but a private dispute. BNPP is surprised that essential evidence was not presented during the first instance and will appeal. The verdict will be returned by three judges and BNPP will argue for the application of Swiss law (the Swiss government itself has confirmed that the liability sought has no legal basis).
- BNP Paribas shares fell sharply (-15% in three trading sessions), with themarket fearing that this decision could encourage thousands of Sudanese refugees in the United States to take similar action, either collectively or individually. According to BNPP, it seems unthinkable to extrapolate the current fine to the 20,000 or so potential claimants (who will likely have to be dealt with on a case-by-case basis), nevertheless, a Bloomberg article envisages a fine of $10 billion (a scenario in which each claimant would receive $500,000),equivalent to the destruction of market capitalisation recorded since the conviction.
- Despite the group’s confidence, it is difficult to assess their chances of winning on appeal; this dispute therefore clearly calls into question the visibility of the investment case.
- Such controversy increases the cost of equity (legal and reputational risk) and reignites discussions about the minimum level of capital adequacy, which is already rather low compared to some peers (Core Tier 1 target of 12% in 2025 and 12.5% in 2027). A fine of $10 billion (hitting Core Tier 1 by 1%) would cause them to fall below their target. One of the possible measures to strengthen their capital levels would therefore be to cancel their share buyback program or even sell off assets.
- Despite its current very attractive valuation (2025 price-to-book ratio of 0.65x, on a par with Société Générale, which nevertheless has a lower return on tangible equity, ROTE), isn’t the stock “dead money” until the appeal decision (not for several months)? Until then, the share price remains dependent on potentially negative news flow (possible class action, appeal delays, provisions, etc.).
- Against the backdrop of France’s sovereign rating downgrade, which is not helping the attractiveness of domestic banks, we believe that the stock is likely to lack catalysts for a rerating in the short term. We will certainly have to wait for a clearing event before the solid fundamentals are reflected in the valuation again.
