Is it a good time to buy General Electric stock?

— -- Q: Is it a good time to buy into General Electric yet?

Investors who bought into the stock five years ago, when GE was trading for about $35 a share, have endured a roller-coaster ride of volatility that's been pretty disappointing. Today, the stock is trading for roughly $16 a share, meaning investors have lost more than 50% of their stock value in just five years. In comparison, the stock market, measured by the Standard & Poor's 500, is down roughly 10%.

GE has been particularly disappointing because the company was supposed to have built-in advantages to make it appealing during the economic downturn. It's a huge exporter, tapping giant markets for power products and other equipment in Asia. The company is also involved in alternative energy, another industry that's supposed to be ripe for growth.

Nonetheless, investors continue to wait for something bright to turn on at GE. Should investors keep waiting, or should they move on to another opportunity? To find out, we'll put GE stock through the four tests considered at Ask Matt, including:

Step 1: Risk vs. reward. When you take a risk on a stock, you want to make sure you're properly rewarded. Downloading GE's trading history back to 1962, we see the company generated an annual compound rate of return of 13.4%, including the current dividend yield of 4%. That's a solid return if you consider the S&P 500 returned an annualized 9.1% return over the same period, says IFA.com.

But to get that better-than-average return, you had to take greater risk. You accepted risk — standard deviation — of 26 percentage points. So, by investing in GE, you took on 71% more risk to get a 47% higher return. Much greater risk for just a little bit more return: That's not a great tradeoff and precisely why investors have felt frustrated with GE for some time now.

Step 2: Measure the stock's discounted cash flow. Some investors decide if a stock is pricey by comparing its current price to the present value of its expected cash flows. It's a complicated analysis made simple with a system from NewConstructs.

When we run GE's stock, we find it's rated "neutral." In other words, the current stock price is about equal to the value of what the company is expected to generate in cash over its lifetime.

Step 3: Compare the stock's current valuation to its historical range. BetterInvesting's Stock Selection Guide can help. If the company can increase earnings 13.9% a year the next five years, that would put the stock in the "buy" range. This indicates the stock is inexpensive relative to the earnings the company is expected to generate.

Step 4: Check the company's financial health. Before investing in any company, you want to make sure it's in good financial shape. A quick way to check is to look at where it falls on the USA TODAY Stock Meter, which ranks stocks from conservative (1) to aggressive (5). GE scores a respectable 2.3 here. You can get a Stock Meter score for almost any stock by going to money.usatoday.com and putting the stock's ticker symbol or company name into the Get a Quote box.