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General Electric (GE) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
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General Electric (GE) closed at $9.88 in the latest trading session, marking a -1% move from the prior day. This move lagged the S&P 500's daily loss of 0.08%. Meanwhile, the Dow gained 0.06%, and the Nasdaq, a tech-heavy index, lost 0.07%.

Heading into today, shares of the industrial conglomerate had lost 0.5% over the past month, lagging the Conglomerates sector's gain of 1.28% and the S&P 500's gain of 0.52% in that time.

GE will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.08, down 50% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $26.85 billion, down 6.3% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.53 per share and revenue of $117.69 billion. These totals would mark changes of -18.46% and -3.23%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for GE. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 17.7% lower within the past month. GE currently has a Zacks Rank of #4 (Sell).

Valuation is also important, so investors should note that GE has a Forward P/E ratio of 18.89 right now. This represents a premium compared to its industry's average Forward P/E of 16.34.

Investors should also note that GE has a PEG ratio of 4.44 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GE's industry had an average PEG ratio of 1.84 as of yesterday's close.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 96, which puts it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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