Why GE's Latest Move Makes It a Buy

General Electric's (NYSE: GE) announcement earlier this month that it planned to separate into three different companies certainly surprised the market. However, it should also have delighted investors who believe the company currently trades at a "conglomerate discount."

According to that thinking, when it's broken up, the constituent parts should trade at higher valuation multiples than their implied valuation as part of a conglomerate. Let's take a look at the validity of that argument.

Image source: General Electric.

Source Fool.com