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General Electric (GE - Free Report) is a Zacks Rank #5 (Strong Sell) that is a high-tech industrial company that operates all over the world. It operates through four segments: Power, Renewable Energy, Aviation, and Healthcare segments.
The company has struggled over the last decade as poor earnings and too much debt drove the stock lower and lower. However, GE has been trying to turn things around by spinning off some divisions and going through a reverse stock split.
While the stock is well off its 2020 lows, investors might be getting ahead of themselves as it teases levels just below 2021 highs.
About the Company
General Electric is headquartered in Boston, MA and employs over 168,000. The company was founded in 1892 and has become a household name.
While the stock saw huge success over its history, the financial crisis brought GE to its knees. After a decade of struggle, GE is now valued at $110 billion. It has a Forward PE of 27, which gives it a Zacks Style Score of “D” in Value. While there are valuation questions, the stock has a Zacks Style Score of “A” in Growth.
Q4 Earnings
General Electric saw a Q4 earnings beat of 10% in late January. However, revenues came in below expectations and the company guided FY22 lower. FY22 is now expected to come in at $2.80-3.50 v the $4.05 expected.
While the guide was pretty bad, there were some positives. The company sees FY22 organic revenue at “high single digits growth” and guided FY23 FCF on path to greater than $7 Billion.
Management commented on opportunities for sustainable profit growth and sees the dramatic debt reduction as a way to “play offense”.
While the quarter gave some reasons for the bulls to buy the stock, analysts have lowered estimates since the earnings report.
Estimates
Over the last month, estimates have dropped across all time frames. For the current quarter, we see seen a drop from $0.61 to $0.41, or 32%. For the current year, we see a drop of 12%, from $4.05 to $3.54.
Technical Take
The stock saw a reverse stock split over the summer. This took the stock to the $100-105 area, where it traded until it spiked to $116 in early November. From there, it went straight down to $90 on a market sell off.
Since then, the stock has traded under the 200-day Moving average, hitting new 2021 lows after Q4 earnings.
However, the stock has bounced nicely since then and is back to that $100 area. Investors should be cautious at current levels as the stock approaches the 200-day MA once again. If GE can get over $106, the bulls could be in the clear. If the 200-day holds again, watch out for a move back to that $90 area.
In Summary
General Electric is a household name, but the stock performance over the last decade has helped people forget what it used to be.
For now, a better diversified conglomerate option might be Griffon Corporation (GFF - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) and the company is coming off a 200% EPS beat about a month ago.
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Bear of the Day: General Electric (GE)
General Electric (GE - Free Report) is a Zacks Rank #5 (Strong Sell) that is a high-tech industrial company that operates all over the world. It operates through four segments: Power, Renewable Energy, Aviation, and Healthcare segments.
The company has struggled over the last decade as poor earnings and too much debt drove the stock lower and lower. However, GE has been trying to turn things around by spinning off some divisions and going through a reverse stock split.
While the stock is well off its 2020 lows, investors might be getting ahead of themselves as it teases levels just below 2021 highs.
About the Company
General Electric is headquartered in Boston, MA and employs over 168,000. The company was founded in 1892 and has become a household name.
While the stock saw huge success over its history, the financial crisis brought GE to its knees. After a decade of struggle, GE is now valued at $110 billion. It has a Forward PE of 27, which gives it a Zacks Style Score of “D” in Value. While there are valuation questions, the stock has a Zacks Style Score of “A” in Growth.
Q4 Earnings
General Electric saw a Q4 earnings beat of 10% in late January. However, revenues came in below expectations and the company guided FY22 lower. FY22 is now expected to come in at $2.80-3.50 v the $4.05 expected.
While the guide was pretty bad, there were some positives. The company sees FY22 organic revenue at “high single digits growth” and guided FY23 FCF on path to greater than $7 Billion.
Management commented on opportunities for sustainable profit growth and sees the dramatic debt reduction as a way to “play offense”.
While the quarter gave some reasons for the bulls to buy the stock, analysts have lowered estimates since the earnings report.
Estimates
Over the last month, estimates have dropped across all time frames. For the current quarter, we see seen a drop from $0.61 to $0.41, or 32%. For the current year, we see a drop of 12%, from $4.05 to $3.54.
Technical Take
The stock saw a reverse stock split over the summer. This took the stock to the $100-105 area, where it traded until it spiked to $116 in early November. From there, it went straight down to $90 on a market sell off.
Since then, the stock has traded under the 200-day Moving average, hitting new 2021 lows after Q4 earnings.
However, the stock has bounced nicely since then and is back to that $100 area. Investors should be cautious at current levels as the stock approaches the 200-day MA once again. If GE can get over $106, the bulls could be in the clear. If the 200-day holds again, watch out for a move back to that $90 area.
In Summary
General Electric is a household name, but the stock performance over the last decade has helped people forget what it used to be.
For now, a better diversified conglomerate option might be Griffon Corporation (GFF - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) and the company is coming off a 200% EPS beat about a month ago.