GE Stock Higher on Synchrony Share Exchange

GE stock is increasing after the company announced the final stock exchange ratio related to the spin-off of Synchrony Financial (SYF).
By Amanda Gomez ,

NEW YORK (TheStreet) -- General Electric Co.  (GE) - Get Report stock is up 0.1% to $30.19 in mid-morning trading on Friday after the company announced the final exchange ratio for the share swap with Synchrony Financial (SYF).

GE will offer 1.0505 shares of Synchrony for each eligible GE share until November 16.

The transaction, which is related to the spin-off of Synchrony Financial, is equivalent to about $20.2 billion in GE stock buyback.

"We expect to complete the exchange offer next week and are pleased with the result of the pricing period and final exchange ratio," GE Capital CEO Keith Sherin said in a statement. "The result is good for GE shareholders as we expect to retire about 671 million shares and reduce our outstanding float by approximately 6.6% upon completion of the exchange offer."

GE separated Synchrony Financial in March 2014 as part of the company's plan to divest its financial units and focus on its industrial businesses.

Separately, 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 a number of strengths, 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 expanding profit margins and solid stock price performance. We feel its 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:

  • 42.21% is the gross profit margin for GENERAL ELECTRIC CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.95% trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • GENERAL ELECTRIC CO reported flat earnings per share in the most recent quarter. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, GENERAL ELECTRIC CO reported lower earnings of $1.31 versus $1.47 in the prior year. This year, the market expects earnings to be in line with last year ($1.31 versus $1.31).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Industrial Conglomerates industry average. The net income has significantly decreased by 29.1% when compared to the same quarter one year ago, falling from $3,536.00 million to $2,506.00 million.
  • You can view the full analysis from the report here: GE

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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