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Here's Why General Electric (GE) Shares are Down 10% YTD

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General Electric (GE - Free Report) is grappling with supply-chain disruptions, including labor and material shortages and high logistics costs. The company is seeing persistent weakness in the Power and Renewable Energy segments. Unfavorable foreign currency movements are adding to the woes of the company. Due to these headwinds, shares of GE have declined 10% so far this year.

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Supply-chain disruptions are impacting deliveries in the commercial engine, thus hurting General Electric’s revenues. Delay in delivery of products due to supply-chain woes is impacting the company’s free cash flow. Shortage of raw materials and labor is weighing on the Aerospace segment, while the HealthCare segment is seeing reduced output due to supply-chain constraints. Lack of availability of raw materials is also hurting the Renewables segment. Supply-chain disruptions among other headwinds affected revenues by about 4 percentage points in the third quarter of 2022.

Persistent weakness in the Power and Renewable Energy segment is concerning. Softness in aero-derivative unit shipments at Gas Power is hurting revenues at the Power segment. The segment’s revenues declined 8% year over year in the first nine months of 2022. Lower U.S. onshore wind volumes and continued pressure from onshore North American market dynamics are weighing on orders in the Renewable Energy segment. Revenues in the segment fell 17% in the first nine months of 2022.
 
Adverse foreign currency movements are denting GE’s top line. In third-quarter 2022, forex woes adversely impacted healthcare revenues by five points.

Zacks Rank & Key Picks

General Electric currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering are as follows:

Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

Applied Industrial has an estimated earnings growth rate of 14.3% for the current fiscal year. The stock has gained 20% in the past six months.

IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company pulled off a trailing four-quarter earnings surprise of 5.7%, on average.

IDEX has an estimated earnings growth rate of 28.3% and 6.1% for the current and next years, respectively. The stock has rallied 23% in the past six months.


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