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General Electric (GE) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

General Electric (GE) closed at $10.25 in the latest trading session, marking a +0.49% move from the prior day. This change outpaced the S&P 500's 0.12% gain on the day. Elsewhere, the Dow lost 0.08%, while the tech-heavy Nasdaq added 0.54%.

Coming into today, shares of the industrial conglomerate had gained 1.49% in the past month. In that same time, the Conglomerates sector gained 1.71%, while the S&P 500 gained 3.68%.

Wall Street will be looking for positivity from GE as it approaches its next earnings report date. This is expected to be July 31, 2019. In that report, analysts expect GE to post earnings of $0.12 per share. This would mark a year-over-year decline of 36.84%. Our most recent consensus estimate is calling for quarterly revenue of $28.88 billion, down 4.07% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.61 per share and revenue of $118.47 billion. These totals would mark changes of -6.15% and -2.59%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for GE. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. GE currently has a Zacks Rank of #3 (Hold).

Digging into valuation, GE currently has a Forward P/E ratio of 16.81. Its industry sports an average Forward P/E of 16.79, so we one might conclude that GE is trading at a premium comparatively.

We can also see that GE currently has a PEG ratio of 2.32. 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. The Diversified Operations was holding an average PEG ratio of 1.87 at yesterday's closing price.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 106, which puts it in the top 42% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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