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

Zacks Equity Research

In the latest trading session, General Electric (GE) closed at $10.27, marking a -0.96% move from the previous day. This move lagged the S&P 500's daily gain of 0.02%. At the same time, the Dow added 0.1%, and the tech-heavy Nasdaq gained 0.17%.

Prior to today's trading, shares of the industrial conglomerate had gained 0.58% over the past month. This has lagged the Conglomerates sector's gain of 2.84% and the S&P 500's gain of 4.82% 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. 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 $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 should also note any recent changes to analyst estimates for GE. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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, 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 remained stagnant within the past month. GE is currently sporting a Zacks Rank of #1 (Strong Buy).

Investors should also note GE's current valuation metrics, including its Forward P/E ratio of 17.09. Its industry sports an average Forward P/E of 17.01, so we one might conclude that GE is trading at a premium comparatively.

Meanwhile, GE's PEG ratio is currently 2.36. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Diversified Operations was holding an average PEG ratio of 1.91 at yesterday's closing price.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 35, which puts it in the top 14% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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