GE Stock Higher Today as Banking Business Cuts Considered

Shares of GE are up today as the company is considering making deeper cuts in its banking business.
By Sebastian Silva ,

NEW YORK (TheStreet) -- Shares of General Electric Co. (GE) - Get Report are up 0.54% to $25.33 in afternoon trading today as the company is considering making deeper cuts in its massive banking business, sources told the Wall Street Journal.

The company decided that returns from lending aren't worth the discontent the business causes among GE's investors, the source said.

CEO Jeff Immelt is faced with the task of focusing the company and winning over investors as the stock price remains below $30 since the financial crisis and is down about 1.5% from a year ago.

"GE Capital must enhance our industrial competitiveness, not detract from it," Immelt writes in a letter to shareholders expected to be published Monday with the company's annual report, according to the Journal. "We see a significant advantage in our ability to bring financial solutions to industries like aviation, energy and health care. But make no mistake, the ultimate size of GE Capital will be based on competitiveness, returns and the impact of regulation on the company."

In the fourth quarter, the company reported that GE Capital had revenue of about $11.51 billion.

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 few notable 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 revenue growth, growth in earnings per share, compelling growth in net income, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

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

  • The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GENERAL ELECTRIC CO has improved earnings per share by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GENERAL ELECTRIC CO increased its bottom line by earning $1.50 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $1.50).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Industrial Conglomerates industry. The net income increased by 60.5% when compared to the same quarter one year prior, rising from $3,209.00 million to $5,152.00 million.
  • 49.72% 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 12.40% trails the industry average.
  • You can view the full analysis from the report here: GE Ratings Report
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