Will General Electric (GE) Stock Be Helped by Bids for $6.6 Billion in Assets? - TheStreet

NEW YORK (TheStreet) -- General Electric's (GE) - Get Report  Money Bank in France, which has roughly $6.6 billion in assets, has received rival bids from three buyout funds, sources told Reuters. 

CVC Capital Partners, Cerberus Capital Management and JC Flowers are competing to buy the unit, with Morgan Stanley and Rothschild leading the sale, according to Reuters. 

A deal could close within the next few weeks. 

GE hopes to reduce its GE Capital business, the division under which the sale would fall, to no more than 10% of earnings, Reuters adds. The finance business made up 42% of the company's profit last year, but GE is shifting its focus toward manufacturing instead.

Shares of the diversified infrastructure and financial services company are sliding by 0.61% to $29.16 in midday trading on Friday. 

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 several positive factors, 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 11.7%. 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 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