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GE's Unit Buys Stake in LKZ, Expands Foothold in Kazakhstan

Zacks Equity Research

GE Transportation, a unit of General Electric Company GE recently completed the purchase of a 50% stake in Lokomotiv Kurastyru Zauyty (LKZ) from Kazakhstan’s national railway company, KTZ.

Based in Astana, Kazakhstan, LKZ manufactures and markets locomotives. The company serves state and private railways in Kazakhstan, Tajikistan, Turkmenistan, Azerbaijan, Estonia, Mongolia, and other countries in the CIS (Commonwealth of Independent States) region.

GE Transportation has worked with LKZ for over 10 years. The locomotives, built locally are utilized in Kazakhstan’s railways and operated throughout the CIS region. This collaboration will enable General Electric strengthen its foothold in the region. LKZ manufactures General Electric’s Evolution Series locomotives for freight and passenger transportation in the region and the broader CIS region.

This strategic collaboration will also help KTZ improve the regions’ rail infrastructure by providing modern and reliable solutions. General Electric will continue providing infrastructure improvements across the country, by introducing the most advanced locomotive technology across the CIS region.

This collaboration reflects General Electric’s commitment toward supporting the region’s development by bringing localized advanced technologies, global expertise and investments in manufacturing.

General Electric underperformed the Zacks categorized Diversified Operations industry in the last 30 days, with an average return of 0.7% compared with 0.8% gain of the latter. These prudent steps taken by the company to expand its foothold are likely to boost its revenues and improve its performance compared with its peers.

GE Transportation contributed 3.8% to total revenue in fourth-quarter 2016. It provides technology solutions for customers in a variety of industries, such as railroad, marine, drilling, wind and mining.

General Electric currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include 3M Company MMM, Barloworld Limited BRRAY and Bunzl plc BZLFY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3M has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22x.

Barloworld has a long-term earnings growth expectation of 18.7%.

Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 20.7x.

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