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GE Investors Watch Earnings for Industrial Margin

But Glynn on Jan. 2 downgraded GE to a "perform" rating from "outperform," because "2014-15 represents a transitional period" that projects a compound annual growth rate for earnings-per-share in the mid single digits over the next two years. Glynn estimates GE's operating earnings will grow from $1.64 a share in 2013 to $1.70 in 2014 and $1.80 in 2015.

Despite the neutral rating, Glynn in his report on Jan. 2 called GE "solid store of value."

GE had $130.4 billion in cash and marketable securities as of Sept. 30.  That cash hoard fed a $13.9 billion deployment of capital through dividends and share buybacks during the first three quarters of 2013.  The company in December raised its quarterly dividend to 22 cents a share from 19 cents.  The shares have a dividend yield of 3.26%, based on Tuesday's closing price of $26.97.  The company's average diluted shares count declined by 3% year-over-year through Sept. 30.

"Our Buy thesis [is] straightforward -- a huge cash position, improving cost structure and focus on dividends and share repurchase should drive [GE's] earnings recovery," wrote Brian K. Langenberg of Langenberg and Co. in a note to clients on Dec 23.  He estimates GE's fourth-quarter earnings will come in at 54 cents a share.  His EPS estimate for GE in 2014 is $1.70, rising to $1.85 for 2015.  Langenberg's 12-month price target for General Electric's stock is $30, while his three-year fair value estimate is $40 a share.

The following chart shows the performance of GE's stock against the Dow Jones Industrial Average and the S&P 500 since the end of 2011:

GE Chart data by YCharts


Interested in more on General Electric? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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