GE HealthCare Technologies Inc. (GEHC)

Conclusion

GE HealthCare Technologies makes imaging systems, ultrasound, patient monitoring and pharmaceutical diagnostic agents used to diagnose, treat and monitor patients. At a price of 84.03 USD on 9 November 2026, its market capitalisation is 37.99 billion USD.

The verdict is overvalued. The fair value band runs from 37.64 to 56.46 USD with a midpoint of 47.05 USD, giving a margin of safety of -44.0% at the current price. The discounted cash flow gives 47.05 USD per share at a discount rate of 8.9%. Current multiples are a P/E of 21.6, an EV/EBITDA of 14.2 and a P/FCF of 31.5, but their ten-year medians are not available because the price history is too short. The reverse DCF implies growth of 13.2% a year, while revenue grew 3.7% a year over five years and free cash flow per share grew 0.8% a year.

The strongest numbers are ROIC of 10.5% against a WACC of 7.8%, which gives a spread of 2.7% as reported, free cash flow conversion of 68.5% over the last twelve months, and a Beneish M-score of -2.49, which is unlikely to signal manipulation. The weakest are net debt to EBITDA of 2.35, a five-year EPS compound growth rate of -31.7%, and a Piotroski score of 3 out of 9.

Financial health

Financial health is yellow: the current ratio of 1.30 is good, but net debt to EBITDA of 2.35 and interest coverage of 5.94 are only neutral. The quick ratio is 0.77 and debt to equity is 0.90. The Altman Z-score is 1.95, in the grey zone; the model was built for manufacturers, and this company manufactures medical devices, so it is a reasonable guide here. Insolvency risk: low, about 1.2% by the estimate of the Ohlson model over one to two years, based on figures as of 31 December 2025.

Earnings quality

Earnings quality is yellow: cash conversion and the Beneish reading hold it up, while the Piotroski score pulls it down. Free cash flow conversion is 68.5% over the last twelve months and 69.9% over five years, and the accrual ratio is 0.3%. Stock-based compensation is 0.7% of revenue, leaving free cash flow after it at 1.05 billion USD. The five-year share count compound rate is 0.2%, so there are no meaningful buybacks. The company beat earnings expectations in 7 of the last 8 quarters, with an average surprise of 8.7%. Analysts raised the current-year estimates by 2.0% over 90 days and the next-year estimates by 1.7%, with 14 upward revisions against 1 downward in the last 30 days.

Profitability

Profitability is green: return on invested capital clears the cost of capital, although margins are mixed against their history. The gross margin is 43.3% against a ten-year median of 40.0%. The operating margin is 13.2% against a median of 13.4%, and the net margin is 8.5% against a median of 10.5%. ROIC of 10.5% compares with a WACC of 7.8%, a ROIC minus WACC value of 2.7%, and a five-year median ROIC of 13.7%. Return on equity is 15.2%, but the DuPont split shows it is lifted by leverage: an equity multiplier of 3.56 sits beside a net margin of 10.1% and an asset turnover of 0.56, all as of 31 December 2025.

Growth

Growth is yellow: revenue growth is steady, but per-share earnings and cash flow have not kept pace. Revenue compounds at 4.0% over three years and 3.7% over five, and it grew in all 6 comparable years. EPS compounds at 2.4% over three years but at -31.7% over five. Free cash flow per share compounds at -6.3% over three years and 0.8% over five. Analysts expect next-year EPS growth of 9.4%.

Valuation

Valuation is red: the verdict is overvalued, with a margin of safety of -44.0%. The P/E is 21.6, the EV/EBITDA is 14.2, the P/FCF is 31.5, the price-to-sales is 1.84 and the price-to-book is 3.27. The free cash flow yield is 3.2% and the earnings yield is 4.6%. Comparison with ten-year medians is not available, as the history is too short. The discounted cash flow gives 47.05 USD per share at a discount rate of 8.9%, assuming 6.6% growth in the first stage and 2.5% in the terminal stage; the terminal value makes up 57.0% of that figure. The reverse DCF implies 13.2% growth against 3.7% revenue growth over five years. The dividend yield is 0.17% and the payout on free cash flow is 5.3%. The fair value is an estimate built on fixed assumptions, not a price target.

Risks

Leverage is the main risk: a net debt to EBITDA of 2.35 and interest coverage of 5.94 leave less room if earnings fall, and the company does not report its debt maturity schedule, so refinancing risk cannot be judged. The five-year EPS decline of -31.7% and the Piotroski score of 3 out of 9 suggest that reported profit has not converted into per-share gains, and the Altman Z-score of 1.95 in the grey zone adds to the concern. If the market keeps the reverse DCF growth expectation of 13.2%, the price would need delivery well above the 3.7% revenue growth achieved. Revenue by segment is not available, so the analysis cannot show which product lines carry the growth. The ten-year valuation medians and a historical fair value are not available.