Not since November 2011 had General Electric Company (NYSE:GE) stock traded below $15. But GE stock has done so this week, as its long decline continues.

Intuitively, I understand why investors might be intrigued by GE stock at the moment. General Electric stock has fallen by almost half over the past year; a stunning move. Obviously, the company has its problems. But at some point, those problems would seem to be priced in, and GE would seem to be “cheap enough.”

But $15 – or $14 – isn’t necessarily a floor. There remains a laundry list of issues that could push GE stock lower. And the “cheap enough” case for GE has been made for the better part of a year now, while GE shares have done nothing but move straight down.

Indeed, I argued back in November that I thought GE stock could drop as low as $10-$12 per share. Nothing since has changed my opinion. If anything, GE looks worse now than it did then, as difficult as that may be to believe. And there’s little reason to see an end to the continuing bad news coming out of General Electric.

The Bull Case for GE Stock

At this point, GE is a clear turnaround play and admittedly a seemingly cheap one at that. The company’s Q4 earnings report last month wasn’t particularly impressive: GE missed consensus on both the top and bottom lines. But, at the least, GE reiterated 2018 guidance for $1-$1.07 in EPS and $6-7 billion in free cash flow.

That leaves GE priced at seemingly attractive multiples. The 2018 P/E ratio is just over 14x. GE’s dividend yields 3.1% despite a 50% cut just a few months ago.

And while GE has problems, it has some value as well. GE Aviation is an attractive business, and saw orders rise 11% in Q4, per the Q4 conference call. One need only look at the stock chart of Boeing Co (NYSE:BA), in particular, to see the strength in GE’s end markets there.

GE Healthcare posted strong Q4 and full year results, and CEO John Flannery spoke optimistically of that division’s prospects in 2018. There’s still hope for a breakup of the company that would unlock the value in the better-performing divisions.

Meanwhile, as James Brumley wrote last month, the market simply hates GE stock. And that seems to support a contrarian case. There’s no shortage of old saws exhorting investors to buy when everyone else is selling. And, seemingly, everyone else is selling General Electric Stock.

But General Electric Stock Isn’t Cheap

The problem with contrarian saws in general, and in this case particularly, is that they all contradict one another. A GE bull says to “buy when there’s blood in the streets.” A GE bear, equally confidently, cites the admonition against catching a falling knife.

And the problem with the “cheap enough” argument for GE is that so much potential bad news remains across the board. For instance, GE looks cheap at 14-15x 2018 EPS. But GE’s guidance can be trusted after several misses over the past few years. Indeed, its earnings can’t even be trusted.

After the company took a surprise $6.2 billion charge in its reinsurance business, the SEC has opened an investigation into its accounting. The gap between earnings and cash flow has widened and continues to do so.

EPS guidance might be $1-$1.07 per share. But free cash flow guidance of $6-7 billion implies something closer to $0.70-$0.80 per share in cash flow and a 19-22x forward multiple.

It’s much harder to argue that GE is cheap at 20x free cash flow. That’s a multiple that prices in growth that isn’t coming any time soon. And it’s a multiple that doesn’t price in the other risks facing the stock.

What Can Still Go Wrong

At ~20x cash flow, investors are buying a stagnant business and taking on a ton of risk. GE has a $31 billion pension liability, over 20% of its market capitalization. That debt can complicate any potential breakup, as Bloomberg pointed out last month.

There’s the SEC investigation, and the possibility of further losses in reinsurance, both of which would lower earnings.

GE’s stake in Baker Hughes, a GE Company Class A (NYSE:BHGE) continues to lose value, with the stock at its lowest levels in almost two years amid apparent market share losses to Halliburton Company (NYSE:HAL) and others.

General Electric stock appears likely to be removed from the Dow Jones Industrial Average (possibly to be replaced by Facebook Inc (NASDAQ:FB)), ending a century-long run and leading to forced index fund selling.

There’s still a lot that can go wrong here. And, again, it’s not as if GE stock is that cheap. So $10-$12 isn’t out of the question. It would suggest a 10-12x multiple to earnings that investors can’t trust.

It would suggest a 14-15x multiple to cash flow; a multiple that seems logical, given it suggests growth will return at some point, albeit not soon. And it would return GE’s dividend yield to the 4-5% range seen before the cut.

I’m not short GE stock nor I am guaranteeing the stock will drop another 20%. But it’s a logical scenario, and one that doesn’t require multiple things to go wrong. It requires the trend to continue and perhaps one more thing to go wrong. After the last fourteen months, can an investor really trust there isn’t at least one more shoe to drop?

As of this writing, Vince Martin has no positions in any securities mentioned.