In late November we highlighted
GE as a counter trend buy.
We maintain that
GE offers deep value for longer term investors and highlight the recent buying interest which is starting to build. GE has now rallied over $1.00 or 7% from the November low. GE shares sold off following the re-statement of accounts and recognition by investors of the cash flow issues, bloated expenses and under performing business units.
The new CEO, John Flannery, is now in place and announced a restructuring plan last month along with a 50% cut in dividend.
Like any large organisation, these changes take time to address and implement. However, 1 – 3 years out we’ll start to see a very different
GE begin to emerge.
If you’d like to add
GE to your portfolio or other international shares, please contact email@example.com
General Electric has sold off following the announced business restructure and cut in dividend. Based on forward earnings and 15x multiple a conservative valuation is $16 for GE shares.
Look for buying to develop within the $16 – $18 range.
Our Algo Engine generated a “short” or sell signal in
General Electric back in mid December, when the stock was trading $32. In last nights sell-off in the US, GE was the worst performing stock within the Dow Jones index.
The overnight selling is a continuation of the downtrend that has been in place since the December high.
Chart – GE
General Electric fell to a 1-month low of $30.30 after the company reported Q4 revenue which fell short of expectations.
The company’s Q4 earnings of 46 cents per share were in line with forecasts, but the revenue number of $33.08 billion was lower than the consensus estimate of $33.63 billion.
For calendar year 2016, GE delivered $1.49 of earnings per share, 1% organic growth and returned $30.5 billion to share holders through dividends and share buybacks.
We expect GE’s oil and gas operations merger with Baker Hughes will pay dividends throughout 2017 and would look for buyers to return near the November 4th support level at $27.50
It’s somewhat concerning the rollover in GE and likewise in top market cap US financials. We watch these signals closely as further evidence of structural share price weakness.
Our Algo Engine flagged the short signal setup in GE at or near the recent high of $32.
Chart – GE