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General Electric (GE) Provides Outlook for FY21, Announces Deal
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General Electric Company (GE - Free Report) recently provided outlook for full-year 2021. Its share price decreased 5.4% yesterday, ending the trading session at $13.25.
Inside the Headlines
General Electric’s Chief Executive Officer, H. Lawrence Culp, Jr. believes that the company is well poised to benefit from improvement in business conditions and its plan of transforming itself into a high-tech industrial firm. Also, in the long run, the company is expected to deliver significant values to its shareholders, employees and customers.
For the Industrial segment, General Electric anticipates organic revenues to increase in low-single digits in 2021, while the segment’s adjusted profit margin will likely expand 250 basis points, organically. Also, for 2021, the company anticipates Industrial free cash flow of $2.5-$4.5 billion.
Notably, per the company’s 2021 guidance, Aviation business’ organic revenues will increase in low-single digit, while that for Renewable Energy and Healthcare businesses is expected to improve in mid-single digit and low-mid-single digit, respectively. On the other hand, organic revenues in the Power business are anticipated to decline in mid-single digit.
In addition, General Electric anticipates 2021 adjusted earnings per share of 15-25 cents, whereas it reported 1 cent in 2020. The Zacks Consensus Estimate for earnings is pegged at 24 cents for 2021. In addition, over the long term, the company aims at achieving net debt-to-EBITDA of less than 2.5X.
Separately, General Electric announced its decision to divest its GE Capital Aviation Services business to AerCap Holdings N.V. (AER - Free Report) in a deal worth more than $30 billion. Notably, the deal is in sync with the company’s strategy of focusing on its core businesses and lowering exposure to the GE Capital business.
On completion of the deal, General Electric intends to use the transaction proceeds and its available cash sources for reducing its debt by about $30 billion, which would likely take its total debt reduction to more than $70 billion since 2018-end.
Zacks Rank and Price Performance
General Electric, with a $116.2-billion market capitalization, currently carries a Zacks Rank #4 (Sell). The pandemic-related uncertainties are likely to affect the company’s operational performance in the near term.
In the past three months, its share price has increased 22.4% compared with the industry’s growth of 5.1%.
Griffon delivered a positive earnings surprise of 115.48%, on average, in the trailing four quarters.
Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.
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Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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General Electric (GE) Provides Outlook for FY21, Announces Deal
General Electric Company (GE - Free Report) recently provided outlook for full-year 2021. Its share price decreased 5.4% yesterday, ending the trading session at $13.25.
Inside the Headlines
General Electric’s Chief Executive Officer, H. Lawrence Culp, Jr. believes that the company is well poised to benefit from improvement in business conditions and its plan of transforming itself into a high-tech industrial firm. Also, in the long run, the company is expected to deliver significant values to its shareholders, employees and customers.
For the Industrial segment, General Electric anticipates organic revenues to increase in low-single digits in 2021, while the segment’s adjusted profit margin will likely expand 250 basis points, organically. Also, for 2021, the company anticipates Industrial free cash flow of $2.5-$4.5 billion.
Notably, per the company’s 2021 guidance, Aviation business’ organic revenues will increase in low-single digit, while that for Renewable Energy and Healthcare businesses is expected to improve in mid-single digit and low-mid-single digit, respectively. On the other hand, organic revenues in the Power business are anticipated to decline in mid-single digit.
In addition, General Electric anticipates 2021 adjusted earnings per share of 15-25 cents, whereas it reported 1 cent in 2020. The Zacks Consensus Estimate for earnings is pegged at 24 cents for 2021. In addition, over the long term, the company aims at achieving net debt-to-EBITDA of less than 2.5X.
Separately, General Electric announced its decision to divest its GE Capital Aviation Services business to AerCap Holdings N.V. (AER - Free Report) in a deal worth more than $30 billion. Notably, the deal is in sync with the company’s strategy of focusing on its core businesses and lowering exposure to the GE Capital business.
On completion of the deal, General Electric intends to use the transaction proceeds and its available cash sources for reducing its debt by about $30 billion, which would likely take its total debt reduction to more than $70 billion since 2018-end.
Zacks Rank and Price Performance
General Electric, with a $116.2-billion market capitalization, currently carries a Zacks Rank #4 (Sell). The pandemic-related uncertainties are likely to affect the company’s operational performance in the near term.
In the past three months, its share price has increased 22.4% compared with the industry’s growth of 5.1%.
Stocks to Consider
A couple of better-ranked stocks from the same space are Griffon Corporation (GFF - Free Report) and Danaher Corporation (DHR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Griffon delivered a positive earnings surprise of 115.48%, on average, in the trailing four quarters.
Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>