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Dividend Stock Advisor

GE Still Attractive, Despite Revenue Miss

By David Peltier | 2017-01-20 10:30:09.0
Stocks in Focus: GE

General Electric (GE:NYSE) is trading fractionally lower on the session, after management posted mixed quarterly results earlier today. The company earned $0.46 a share in the fourth quarter of 2016, which met expectations. On the other hand, revenue decreased 2% from the previous year to $33.09 billion, and fell short of the consensus analyst estimate.

General Electric posted 2% core order growth in the period, led by services demand, which translated to the backlog. Higher sales in the power and aviation businesses offset weakness in the oil and gas division. The company's core industrial margin also expanded 100 basis points in the quarter, to 17.3%.

Looking ahead to 2017, management are targeting earnings of $1.60 to $1.70 a share, on 3% to 5% organic revenue growth. The company expects to further boost the operating margin by 100 basis points and return about $20 billion of cash to investors, through dividends and buybacks.

On the conference call, General Electric said that it has made significant progress integrating the Baker Hughes business, but that the oil business will likely continue to struggle in the first half of the new year.

Following the print, we maintain that shares are attractive to purchase at $30.55, for the secure 3.1% dividend yield. Earnings growth will likely accelerate in the coming quarters and we believe the company has room to raise the dividend later this year.

Regards,

David S. Peltier

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Plus, notable must-own dates over the next week.

01/20/17 - 09:02 AM EST
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Earnings per share matched consensus, while revenue fell just short.

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