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- See a full, concise breakdown of General Electric's operations.
- General Electric appears undervalued at this time.
- The company offers strong double-digit total return potential but investors may be wary after the company's poor performance over the Great Recession.
- This article offers up a deep analysis into the Power and Water Segment of General Electric.
- GE's Power and Water segment is compared to segments of Emerson, Honeywell and United Technologies.
- This analysis suggests that the Power and Water segment of GE is worth about $80 billion, slightly lower than my previous analysis.
General Electric: Hold On Tight, A Perfect Storm Of Profits Lies Ahead
- General Electric is constantly looking for ways to expand into new areas to create opportunities for future growth.
- The latest initiative is General Electric’s wind-power business. General Electric plans to expand its wind-power business globally while providing services such as data analytics to improve turbine performance as well.
- General Electric plans to have a wind turbine business presence in 35 or more countries next year, up from merely eight in 2003.
- Considering the amount of positive news out recently, 2015 could be the year shareholders are justly rewarded. Nevertheless, there are downside risks.
General Electric: As Attractive And Undervalued As Ever, More Than 30% Upside Potential
- General Electric is an interesting conglomerate investment.
- I expect continued strong earnings growth in GE's oil and gas, aviation, and transportation segments.
- There is a chance that analysts underestimate GE's prospective earnings growth.
- General Electric's intrinsic value stays in the $36/37 region, reflecting more than 30% upside potential for patient investors.
Dividend Increase: GE On Tap To Bring Good Things To Investors
- GE should increase its dividend in December.
- Expect $1.00/share, representing a yield of 3.7%.
- The combination of moderate valuation and healthy dividend make GE a Buy.
GE Sees Strong Returns On Its Industrial Internet Investments
- For its 3rd quarter of the fiscal year 2014, GE reported revenues of $36.2 billion, up by a slim margin of 1% from $35.7 billion in Q3 2013.
- Net income for GE amounted to $3.5 billion including the effect of discontinued operations. Net income grew 9% from $3.2 billion in the year ago quarter.
- GE set a goal to reach 4-7% growth in fiscal year 2014 in organic terms from its industrial segment, reaching the lower end of that mark during the 3rd quarter.
- GE is planning a $32 million investment in the construction of an advanced manufacturing unit in Findlay in the hope of developing and implementing innovative technologies in production.
- General Electric recently gained formal approval from the French government for the $13.5 billion acquisition of the energy business of premier French power and transportation company Alstom.
- Many investors feel GE is moving at a snail's pace in steering the company to success.
- CEO Jeff Immelt seems to be following through with his plan to wind down GE Capital and grow the Industrial Division.
- A look at before and after the Financial Crisis: How does GE compare?
General Electric Capital Corporation: The 171st Best Bond Investment
- General Electric Company subsidiary GECC was the most heavily traded bond issuer in the U.S. corporate bond market on November 17, 2014.
- We compare the credit spread to default probability ratios of GECC with all other heavily traded bond issuers in the U.S. corporate bond market.
- The best GECC bond issue ranked 171st of the 254 bond issues that traded at least $5 million on November 17, 2014.
- GE has become of those names that you hold in the portfolio and let the dividends ride.
- The company recently received a contract from Petronas for some turbo-machinery to be used on a floating LNG facility.
- CEO Jeff Immelt will receive a batch of performance share units if he hits certain milestones pertaining to cash balances and operating margins.
- GE is eight companies operating under one company. This article attempts to assign a value to each of those companies.
- This article calculates each segment's value by creating an average P/E ratio from the competition.
- This article shows that GE is fairly valued, or slightly undervalued based on the sum of all the parts.
General Electric: A Golden Total Return Opportunity Is Never Offered Twice
- General Electric currently offers income investors a safe long-term investment. The company has a fortress balance sheet and strong cash flow.
- The planned transformation of the company into an industrial powerhouse is expected to reward investors with capital gains and dividend growth. This makes the stock an excellent total return investment.
- Furthermore, the stock appears undervalued on a relative basis and has several positive catalysts on the horizon. In the following article I will lay out my case.
- GE recently released the CEO's newest incentives.
- The package rewards the CEO and other executives for maintaining a strong cash position and improving operating margins.
- These goals are both served by divesting under performing businesses and showcases GE's next strategic moves.
General Electric's Disappointing Performance Likely To Continue
- General Electric's shares have lagged the market over the last 12 months and they now trade at less than 15 times forward earnings.
- However, despite the relatively low valuation and impressive dividend yield, there are warning signs, such as a disappointing return on invested capital and a highly leveraged balance sheet.
- When the above factors are combined with a projected earnings growth outlook that is only modest, the result is that General Electric shares appear significantly overvalued.
General Electric's CEO Jeff Immelt Is On Easy Street
- General Electric's board recently announced an incentive bonus plan to motivate CEO Jeff Immelt to perform his job.
- Convertible units and options combined could total $18.4 M or possibly more, depending on how GE common shares perform through 2016.
- Immelt has already nearly achieved the level 1 margin threshold requirement.
- GE shares remain undervalued by several valuation measures.
- Sales backlog has reached a record $250B and continues to grow.
- Margin expansion from restructuring efforts is progressing as planned.
- Restructuring is progressing well with key divestitures and acquisitions.
- I don't think so. The stock has had a tremendous run in the past month along with the rest of the market and I want to let it breathe.
- The company however does have a great dividend and increased ROA and ROE from last quarter but I don't think the dividend can grow much more right now.
- Though the stock has run up quite a bit in the past month, I still believe it is undervalued based on 2015 earnings estimates.
- Economic value added (EVA) analysis looks at the profits accruing to the shareholders after subtracting the cost of capital.
- My Analysis shows that GE has been an erratic creator of Economic Value (EV) over the last 15 years. GE destroyed value in 8 of the last 15 years.
- As GE shrinks its balance sheet and goes back to its industrial roots, it is beginning to create increasing EV however it may also become more cyclical.
- The company is sticking to its guns and reducing its exposure to the finance segment of the product portfolio by announcing that it'll sell its stake in Korean JV.
- Alstom deal is due to be completed by the middle of 2015.
- The stock is boring, but pays a great dividend.
General Electric's Debt No Longer Enticing But The Common Looks Good
- When I first profiled GEK the notes were trading at a significant discount to their issue price.
- The notes have moved up more than 20% since my buy call and have become too expensive to continue to hold.
- I prefer GE common shares to GEK at this point for dividend growth and relative value.
Tue, Nov. 18, 6:48 PM
- Halliburton’s (NYSE:HAL) $34.6B buyout of Baker Hughes (NYSE:BHI) has caused HAL shares to plunge 12% since the deal was announced Monday, the worst two-day performance for an acquirer’s stock this year; on average, a company announcing a deal has seen its stock pop 3.1% on the news.
- But analysts say the deal may present game-changing opportunities for a few small and mid-cap oilfield services firms with enough cash on hand to buy a chunk of HAL's expected divestments without diluting their stock or damaging their credit rating.
- Tudor Pickering Holt's Jeff Tillery speculates that Forum Energy Technologies (NYSE:FET), National Oilwell Varco (NYSE:NOV) and GE would be interested in HAL's manufacturing businesses that may come up for bid, while Superior Energy Services (NYSE:SPN) and Frank's International (NYSE:FI) might want certain services-oriented businesses.
- Weatherford (NYSE:WFT) would seem like a logical buyer of some assets and could make it happen with a mix of cash and stock, but RBC's Kurt Hallead thinks HAL might not want to cooperate with a company that could essentially become what Baker Hughes was.
Mon, Nov. 17, 3:59 PM
- In the wake of Halliburton's (NYSE:HAL) $34.6B offer for Baker Hughes (NYSE:BHI), it appears the next hot sector for M&A action is energy: More consolidation is likely, given the weakness for stocks in the oilfield services subsector, low interest rates, and as a drop in demand for oil increases cutthroat pricing competition.
- Speculation is running rampant as investors try to figure out who is next in an industry that is sure to undergo some more consolidation; some names identified as possible candidates include Kodiak Oil and Gas (NYSE:KOG), Marathon Oil (NYSE:MRO), Northern Oil and Gas (NYSEMKT:NOG), Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD).
- GE could go after National Oilwell Varco (NYSE:NOV) to show it is serious about the energy industry after last year’s purchase of pumpmaker Lufkin, Royal Bank of Canada says, and Oppenheimer says even BP could be an acquisition candidate.
- But Morgan Stanley does not see offshore drillers getting in on the action, as larger players like Diamond Offshore (NYSE:DO), Transocean (NYSE:RIG) and Seadrill (NYSE:SDRL) are still addressing dividend concerns while smaller companies such as Atwood Oceanics (NYSE:ATW) and Pacific Drilling (NYSE:PACD) still trade close to replacement value.
Thu, Nov. 6, 9:13 AM
- GE (NYSE:GE) Capital has closed the sale of its GE Money Bank consumer finance business to Santander (NYSE:SAN).
- "This sale is part of our overall strategy to focus GE Capital on our commercial portfolio with a goal of becoming 25% of GE’s overall earnings," says GE Capital CEO Keith Sherin.
- Previously: Santander to acquire GE Money Bank
Wed, Nov. 5, 2:28 AM
- Alstom (OTCPK:ALSMY) says it will convene its shareholders to a general meeting on Dec. 19 to approve the €12.4B ($15.6B) deal that will see General Electric (NYSE:GE) buy most of its power business.
- The deal has already received the green light from the French government, after the state activated the process that would allow it take a stake of up to 20% in Alstom from shareholder Bouygues (OTC:BOUYF).
- Over the medium term, Alstom expects sales to grow over 5% per year organically and its operating margin to gradually improve within a range of 5-7%.
Mon, Oct. 13, 9:14 AM
- GE Capital Aviation Services (NYSE:GE) confirms an agreement to acquire Dublin-based helicopter lessor Milestone Aviation Group for $1.775B.
- GE says the addition of Milestone adds a fast-growing helicopter financing platform that will diversify its business, and will deepen its domain expertise in aviation and oil and gas.
- Milestone’s fleet includes 168 helicopters worth $2.8B as well as a strong forward order book of $3B with a variety of helicopter manufacturers; Milestone’s fleet is used primarily in offshore oil and gas, search and rescue, emergency medical services and mining.
Fri, Oct. 10, 5:54 PM| 2 Comments
Fri, Sep. 19, 5:21 PM
- The latest speculation over Dresser-Rand (NYSE:DRC) now includes GE, which Financial Times reports is holding talks with DRC management about a possible takeover and is deciding whether to launch a bid.
- If it does, it could be the second time GE has faced off against Siemens (OTCPK:SIEGY) over a multibillion-dollar deal in the past six months after competing over the takeover of the energy businesses of Alstom in June.
- Siemens reportedly is in talks with DRC about a ~$80/share offer, and Swiss industrial pump maker Sulzer (OTC:SULZF) has said it is in talks with the U.S. oilfield equipment manufacturer about a possible merger.
Mon, Sep. 8, 2:21 AM
- General Electric (NYSE:GE) has signed a definitive agreement to sell its appliance business to Electrox (OTC:ELUXF, OTCPK:ELUXY) for $3.3B.
- "GE's premium, high-quality appliances complement our own iconic brands and will enhance our presence in North America" says Electrolux CEO Keith McLoughlin.
- Electrolux will continue use of the GE Appliances brand following the close of the transaction (targeted for 2015).
Thu, Sep. 4, 11:33 AM
- Electrolux (OTC:ELUXF, OTCPK:ELUXY) is near a deal to buy General Electric's (GE +0.2%) appliance business for more than $2.5B, with an agreement set to be announced as early as next week, according to a Reuters report.
- GE's iconic household appliance business, which along with lighting generated $8.3B in 2013 revenue, could help the Swedish appliance manufacturer expand beyond its core European market where growth has trailed North America.
Tue, Sep. 2, 3:31 PM
- General Electric (GE -0.4%) reportedly is among those preparing binding offers for Italian valve maker Petrolvalves, with Emerson Electric (EMR +0.4%) also considered a "motivated" bidder which could also participate in the final round of the company's auction.
- The offers could value the Italian company at more than €1B ($1.31B), according to Reuters.
- Petrolvalves is said to have set a deadline for binding offers towards the end of September in an attempt to sign a deal later this year.
Mon, Aug. 18, 6:36 PM
- Around the time GE was closing a deal to buy Alstom's power business in France, the company was already discussing the possibility of selling its U.S. appliance business to Electrolux (OTC:ELUXF, OTCPK:ELUXY), and WSJ says the length of the courtship indicates the talks may be further along than thought.
- GE's Appliance and Lighting unit reported $381M in profit in 2013 on sales of $8.3B, making it the third-smallest of GE's seven industrial business lines by revenue, but that also makes it a prime target for sale as GE tries to pare low-margin businesses and focus its efforts on such heavy industrial products as jet engines, power turbines and oil industry equipment.
- LG Electronics and Samsung also are said to be in the mix of possible buyers, and Quirky Inc. reportedly has teamed up with Blackstone to work on a possible bid.
Thu, Aug. 14, 2:53 AM
- General Electric (NYSE:GE) is in talks with Sweden's Electrolux (OTCPK:ELUXY) and Quirky, a consumer-product development startup, over the sale of its century-old appliances business that could fetch $2B.
- Quirky would partner with private-equity firms to acquire a majority stake, leaving GE with a minority holding.
- GE has been trying to sell its home appliances unit again as CEO Jeffrey Immelt puts a greater focus on industrial operations.
Wed, Jul. 16, 2:27 PM
- General Electric (GE +1.7%) is in talks with potential acquirers about selling its iconic home appliances business, which may fetch $1.5B-$2.5B, Bloomberg reports.
- GE is said to have been waiting to wrap up its acquisition of Alstom’s energy assets before pursuing options including an outright sale of the appliances business; with that deal signed, GE is actively talking to bidders.
- GE Home & Business Solutions, a division that includes appliances and lighting, generated more than $8B in sales last year, or 5.6% of GE’s total revenue.
Wed, Jun. 25, 9:04 AM
- Moody's improves Alstom's (ALSMY) outlook to positive from negative, following General ELectric's (GE) bid that was approved by Alstom's board of directors. The acquisition "reflects Alstom's prospects for improved profitability, free cash flow generation, good liquidity and expectation of lower leverage over the intermediate term."
- Alstom's Baa3 senior unsecured rating has been affirmed.
Mon, Jun. 23, 3:45 AM| 1 Comment
Mon, Jun. 23, 2:25 AM
- The last remaining element to the General Electric (GE)-Alstom (ALSMY) deal has now been complete, after the French government secured its 20% stake in Alstom from Bouygues (BOUYF). Bouygues will lend the shares to the French state, in order for the government to become an immediate shareholder.
- After being ousted from the the deal, Siemens (SIEGY) CEO Joe Kaeser says he's still ready to negotiate with Alstom should the agreement between GE and the power equipment company fall apart.
- Previous coverage
GE vs. ETF Alternatives
General Electric Co is a diversified company with products & services that range from aircraft engines, power generation, oil & gas production equipment, & household appliances to medical imaging, business & consumer financing and industrial products.
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