Can General Electric Shares Go Higher? Highlights And Earnings Expectations

Apr.15.13 | About: General Electric (GE)

General Electric (NYSE:GE) is set to release its 1st-quarter 2013 earnings this Friday at 8:30 a.m. ET. Below I have provided an update of the quarter as well as an overview of earnings expectations.

Profile and Estimates

General Electric has a market cap of $244 billion and currently trades for $23.46 per share. Shares are up 12.7% YTD and are 34.6% above their 52-week low of $17.43. Analysts have a mean target price of $25.67 and a median price target of $25.00. Thirteen analysts have an average 1st-quarter EPS estimate of $0.35 per share on estimated revenues of $34.67 billion. GE has beat or met earnings expectations in all of the last four quarters.

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Fundamentals and Highlights

  • Dividend yield of 3.07%.
  • P/E of 16.9 and P/B of 2.0, which are both below the industry averages 21.1 and 2.6 respectively.
  • Operating margin of 11.8%, ROE of 11.4 and D/E of 1.9, which are all below the industry averages 16.3%, 15.4 and 1.1 respectively.
  • Recently, GE announced it would acquire Lufkin Industries for $88.50 per share or $3.3 billion in cash. This acquisition is expected to further strengthen GE's presence in the oil and gas industry, Lufkin specializes in artificial lift technologies.
  • Sold remaining NBC stake to Comcast for 18.1 billion.
  • Resulting from the NBC cash, the board expects to repurchase $10 billion of shares outstanding.

Bottom Line

GE has been selling off many parts of its business over the past few years to allow it to focus and specialize on its most profitable areas, namely in energy ventures. Due to its size I believe GE will have no trouble gaining market share but, revenue in this sector is more cyclical and largely dependent on favorable and growing economies. I personally expect an earnings beat on lower-than-expected revenues. I would invest in GE but would only be interested if shares were to fall below $20.00.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.