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How Will General Electric (GE) Stock Be Affected As Company Fights To Save Alstom Deal?

NEW YORK (TheStreet) --General Electric Co. (GE) sent Steve Bolze, the President and CEO of GE Power & Water, to Paris on Friday in an attempt to save the company's $17 billion deal with Alstom SA, to buy its energy business.

The French economy minister, Arnaud Montebourg, said the government would intervene in the deal if it felt the American company was in some way going to take away France's "symbol of industrial freedom."

With the government's threat to block the deal and its support of Siemens AG (SI), a German electronics and engineering company, that also expressed interest in Alstom, GE felt pressured to adjust its deal and make it more appealing to the French, NASDAQ.com reports.

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In a letter sent to French President Francois Hollande, GE said it would be willing to make compromises regarding Alstom's nuclear technology in order to calm the country's concern it will lose control over the industry which gives France a significant amount of its electricity, according to NASDAQ.

Shares of GE are down -0.30% to $26.51 on Friday. 

TheStreet Ratings team rates GENERAL ELECTRIC CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate GENERAL ELECTRIC CO (GE) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GE's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • GENERAL ELECTRIC CO's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL ELECTRIC CO increased its bottom line by earning $1.47 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.47).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Industrial Conglomerates industry. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $3,527.00 million to $2,999.00 million.
  • The debt-to-equity ratio is very high at 2.89 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • You can view the full analysis from the report here: GE Ratings Report
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