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

Zacks Equity Research

General Electric (GE) closed at $10.21 in the latest trading session, marking a +1.69% move from the prior day. This move outpaced the S&P 500's daily gain of 0.28%. Meanwhile, the Dow gained 0.07%, and the Nasdaq, a tech-heavy index, added 0.71%.

Prior to today's trading, shares of the industrial conglomerate had lost 5.55% over the past month. This has lagged the Conglomerates sector's gain of 0.04% and the S&P 500's gain of 1.93% in that time.

GE will be looking to display strength as it nears its next earnings release, which is expected to be July 31, 2019. On that day, GE is projected to report earnings of $0.12 per share, which would represent a year-over-year decline of 36.84%. Our most recent consensus estimate is calling for quarterly revenue of $29 billion, down 3.68% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.61 per share and revenue of $118.83 billion, which would represent changes of -6.15% and -2.29%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for GE. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. GE currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, GE is currently trading at a Forward P/E ratio of 16.55. For comparison, its industry has an average Forward P/E of 16.66, which means GE is trading at a discount to the group.

Also, we should mention that GE has a PEG ratio of 2.28. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Diversified Operations stocks are, on average, holding a PEG ratio of 1.89 based on yesterday's closing prices.

The Diversified Operations industry is part of the Conglomerates sector. This group has a Zacks Industry Rank of 48, putting it in the top 19% 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.

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


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