General Electric (GE) Stock Climbs on $13.6 Billion Alstom Deal

General Electric (GE) stock is advancing in mid-morning trading on Monday, following a $13.6 billion acquisition of Alstrom's energy business.
By Rachel Graf ,

NEW YORK (TheStreet) -- General Electric (GE) - Get Report stock is higher by 1.04% to $29.22 in mid-morning trading on Monday, after acquiring France-based Alstrom's energy business for $13.6 billion.

Under the terms of the merger, Alstrom Power and GE Power & Water have combined to form GE Power.

GE Power will be based in Schenectady, NY, and will employ more than 65,000 employees with revenue forecast at around $30 billion.

Steve Bolze, CEO of GE Power & Water, will serve as CEO of GE Power. 

After adjusting for proceeds that Alstrom will reinvest in joint ventures with GE, the purchase price is 9.7 billion euros, Reuters reports.

Additionally, this morning the Department of Justice ruled against an antitrust settlement proposal from Electrolux and GE for a potential $3.4 billion acquisition of GE's home-appliance business, MarketWatch reports.

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 multiple 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 somewhat weak growth in earnings per share.

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

  • 36.77% is the gross profit margin for GENERAL ELECTRIC CO which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.95% trails the industry average.
  • GE, with its decline in revenue, slightly underperformed the industry average of 10.7%. Since the same quarter one year prior, revenues fell by 12.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing 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's earnings per share declined by 17.6% in the most recent quarter compared to the same quarter a year ago. 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 $1.37 versus $1.47 in the prior year. For the next year, the market is expecting a contraction of 4.4% in earnings ($1.31 versus $1.37).
  • 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
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