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

Zacks Equity Research
Abbott (ABT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, General Electric (GE) closed at $12.10, marking a -0.41% move from the previous day. This move lagged the S&P 500's daily gain of 2.15%. At the same time, the Dow added 2.17%, and the tech-heavy Nasdaq gained 2.89%.

Prior to today's trading, shares of the industrial conglomerate had lost 4.33% over the past month. This has was narrower than the Conglomerates sector's loss of 4.55% and the S&P 500's loss of 5.16% in that time.

GE will be looking to display strength as it nears its next earnings release, which is expected to be October 25, 2018. In that report, analysts expect GE to post earnings of $0.21 per share. This would mark a year-over-year decline of 27.59%. Meanwhile, our latest consensus estimate is calling for revenue of $29.88 billion, down 10.73% from the prior-year quarter.

GE's full-year Zacks Consensus Estimates are calling for earnings of $0.94 per share and revenue of $121.76 billion. These results would represent year-over-year changes of -10.48% and -0.27%, respectively.

Any recent changes to analyst estimates for GE should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. Within the past 30 days, our consensus EPS projection has moved 3.3% lower. GE currently has a Zacks Rank of #4 (Sell).

Digging into valuation, GE currently has a Forward P/E ratio of 12.89. This represents a discount compared to its industry's average Forward P/E of 17.9.

We can also see that GE currently has a PEG ratio of 2.34. 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. The Diversified Operations was holding an average PEG ratio of 1.82 at yesterday's closing price.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 210, which puts it in the bottom 18% 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.

To follow GE in the coming trading sessions, be sure to utilize Zacks.com.


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