GEHC

GE HealthCare is a profitable, durable medical-imaging franchise trading at an undemanding 13.5x trailing diluted EPS of $4.55 and just 1.4x sales — a discount that looks unwarranted for a business earning a 20.1% return on equity. FY2025 delivered consistent execution: revenue grew 4.8% to $20.6B, operating income rose 5.3% to $2.76B, and net income climbed 4.6% to $2.08B, extending the recovery from the FY2023 trough of $1.57B. The balance sheet is visibly strengthening — cash jumped 56.3% to $4.49B, stockholders' equity rose 22.9% to $10.4B, and retained earnings surged 61.9% to $5.28B, giving management room to invest, buy back stock ($200M) and grow the still-small dividend.

The market appears to be pricing in the very real near-term headwinds the 10-K spells out plainly. Management quantifies that tariffs cut FY2025 operating income by roughly $245M and cash flows by roughly $285M, primarily bilateral U.S.-China and broad U.S. import tariffs, and warns these will keep hitting results if they persist. China is a second drag, with local competition and Volume Based Procurement compressing orders and revenue. These pressures show up in the numbers: gross profit grew only 0.5% even as revenue rose 4.8%, signaling tangible margin compression to a 40.0% gross margin.