With an $85.29 billion market capitalization, General Electric Company (GE) is a high-tech industrial company. The company offers gas and steam turbines, a full balance of plant, upgrade, and service solutions, as well as data-leveraging software for power generation, industrial, government, and other customers.
GE Renewable Energy recently announced signing a strategic partnership agreement with Hyundai Electric. Under this agreement, Hyundai Electric is expected to serve as a manufacturing associate in South Korea. This should help the company serve its local customers better.
In November, GE announced that its Board of Directors had approved the previously announced spin-off of its healthcare business, GE Healthcare Holding LLC. The company is expected to begin trading on Nasdaq on January 4, 2023, under the “GEHC” ticker.
Given its strong fundamentals, on December 14, GE was upgraded from an overall rating of C (Neutral) to B (Buy) in our proprietary POWR Ratings system.
The stock has gained 18.3% over the past six months and 16.4% over the past three months to close its last trading session at $78.06.
Here are the factors that could influence GE’s performance in the upcoming months:
Favorable Top and Bottom-line Estimates
The consensus EPS estimates of $1.14 and $0.63 for the current (ending December 2022) and next (ending March 2023) quarters indicate 23.9% and 162.5% year-over-year increases, respectively. The consensus revenue estimates for the same periods of $21.60 billion and $18 billion reflect 6.4% and 5.6% improvements from their respective prior-year periods.
Analysts expect GE’s revenue and EPS for the current year (fiscal 2022) to rise 1.5% and 19.8% from the prior year to $75.32 billion and $2.54, respectively. Additionally, its EPS is estimated to increase by 44.5% per annum over the next five years.
Wall Street Analysts Expect Upside
Of the 14 Wall Street analysts rating the stock in the last three months, 10 have given the stock a Buy rating, while four rated it a Hold. The 12-month median price target of $91.64 indicates a 17.4% potential upside. The price targets range from a low of $58 to a high of $107.
Sound Financials
For the fiscal third quarter that ended September 30, GE’s adjusted revenues increased 4% year-over-year to $18.44 billion. Excluding Renewable Energy reserves, adjusted earnings and EPS improved 39% and 42% from the same period last year to $820 million and $0.75, respectively.
POWR Ratings Reflect Promising Prospects
GE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. The stock has a Sentiment grade of B, in sync with the favorable analyst estimates.
GE has a C grade for Momentum, consistent with the stock trading lower than its 50-day moving average of $79.65 but higher than the 200-day moving average of $77.07.
In the 36-stock Industrial – Manufacturing industry, it is ranked #12. The industry is rated A.
Click here to see the additional POWR Ratings for GE (Growth, Value, Stability, and Quality).
View all the top stocks in the Industrial – Manufacturing industry here.
Bottom Line
GE’s recent partnerships and planned spin-offs might help the company generate shareholder returns. Moreover, analysts are bullish about the company’s prospects, and Wall Street expects its stock price to increase in the near term. Hence, the stock might be a solid buy now.
How Does General Electric Company (GE) Stack up Against Its Peers?
While GE has an overall POWR Rating of B, one might consider looking at its industry peers, Vishay Precision Group, Inc. (VPG) and Myers Industries, Inc. (MYE), which have an overall A (Strong Buy) rating.
GE shares were trading at $78.00 per share on Tuesday morning, down $0.06 (-0.08%). Year-to-date, GE has declined -17.08%, versus a -19.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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