General Electric (NYSE:GE) was yesterday's biggest laggard among Dow stocks, sinking 1.6% after reporting a 2% drop in orders for Q2, with industrial orders - GE’s jet engines, power turbines, oil production equipment, et. al. - plunging 16% amid weakness in oil and gas prices that hurt demand.
"The texture of this quarter is very similar to the two most recent quarters, with exceptionally weak orders,” says Morgan Stanley's Nigel Coe, who rates GE at Equal Weight with a $32 price target.
GE's total Q2 revenues rose 15% Y/Y to $33.5B, but organic industrial sales excluding the Alstom acquisition fell 1%; GE needs to meet its own expectations for a substantial upturn in organic trends in H2 in an "extremely challenging" environment, Coe says.
"Those are capital intensive purchases and if those get pushed out even just a little bit" it could weaken GE's performance, says Edward Jones analyst Jeff Windau.
Andrew Elofson at Davidson Investment Advisors takes the long view, seeing Q2 as "a speed bump on the path to their transformation” and not really looking at whether GE can hit its 5% organic sales growth target for H2.
But Standpoint Research’s Ronnie Moas responded to the Q2 results by slapping a Sell rating on GE with a $26 price target, seeing no reason to own the shares that trade at more than 20x 2016 EPS estimates while "dozens" of mid-cap names with room to grow trade at or below 10x earnings - such as YRCW, TGI, AVH, GBX, ARII, CBI, UAL, SPR and ACM.
Greenbrier (NYSE:GBX) announces its plan to redeem remaining 2.375% Convertible Senior Notes due 2026 on Aug. 18, 2016 at 100% of the principal amount plus accrued and unpaid interest.
If the Article XII of the Indentures are met, notes may be converted to common stock at a conversion rate of 21.2958 of common stock for every $1000 of principal amount prior to 5:00 p.m. ET on Aug. 16, 2016.
Aggregate purchase price of ~$870K excl. accrued interest, if none of the notes are converted.
U.S. Bank National Association – Paying and conversion agent
Greenbrier (NYSE:GBX) tumbled more than 9% in today's trade despite beating FQ3 earnings expectations, as the company lowered its forecast for full-year earnings and railcar deliveries.
GBX now sees FY 2016 EPS of $5.70-$5.90 from its April outlook for $5.70-$6.10 vs. $5.79 analyst consensus estimate, on revenues of ~$2.8B from exceeding $2.8B vs. $2.73B consensus; GBX also cut its forecast for railcar deliveries to 20K-21K from 20-22K, raising shareholder concerns about demand next year.
U.S. railroads are struggling with reduced cargo volume of commodities such as coal and sand used in oil drilling, leading to a drop in demand for new rail cars; the Association of American Railroads says cargo fell 6.5% for large U.S. railroads during Q1 with the decline worsening in Q2.