Indeed, Winoker, who has an outperform rating on General Electric and a $21 price target, argues such a risk is "mitigated," however, adding that he sees "the upside outweighing the downside" for General Electric's stock.
Winoker acknowledges other risks for General Electric in his report, "from increased regulation and taxation to competition and pricing." Still, financial arm GE Capital, which had been the conglomerate's biggest liability during the 2008 crisis, is in good shape, Winoker argues, and should have no problem passing an expected "stress test" from the Federal Reserve, which would allow it to kick up cash to the parent company.
Comparing GE Capital with the largest U.S. banks, Bernstein's analysts argue the unit would rank with Citigroup (C)
Winoker concludes General Electric would be well above regulatory minimums even under the Federal Reserve dire stress test scenario of 13% unemployment, the Dow Jones Industrial Average at 5000, and negative 5%-6% GDP growth.
"That just gives me a much higher level of conviction in their ability to actually execute on a dividend and then it becomes more of a decision of just what is the Fed thinking"
That will be clear once the Fed completes its stress test of the 31 largest U.S. banks, expected at the end of March.
As far as the acquisition threat goes, Jeff Immelt appears quite aware of the anxiety expressed by Winoker. During a Dec. 13 investor meeting, General Electric's CEO and chairman said repeatedly that the company would not pursue large acquisitions, focusing instead on deals ranging from $1 billion to $3 billion in cost.
Nonetheless, even after Immelt's repeated assurances that the company would be disciplined about deal-making, one questioner alluded to the issue at the meeting. The person asked Immelt about "a number of oil and gas acquisitions you made in the last two years" and cited "some criticism out there around valuation."
Indeed, General Electric spent $11 billion on energy acquisitions over a six-month period ending in late March of last year, according to a Bloomberg News report.
But Winoker said he was not overly concerned about those deals.
"The question of whether or not they were too expensive is sort of out there, but no individual acquisition was that big. What I'm talking about is sort of -- you know, buying ABB (ABB)
Still, Winoker sees little real risk of that happening.
"So far their behavior in the last couple of years has indicated they won't do that, but that's just a possibility I've got to call out as a risk."