Why GE (GE) Is a 'Buy'

NEW YORK (TheStreet) -- TheStreet Ratings team has reiterated its "buy" rating for GE (GE) with a ratings score of B, making recent weakness a possible buying opportunity.

GE fell 1% to $29.69 Friday, and declined 2.5% over the past week. Shares of the conglomerate rose 28.6% in the past year, hitting a 52-week high of $28.03 on Dec. 31, 2013. About 38.7 million shares of GE were traded Friday, which is slightly above its average daily trading volume of 36.4 million.

GE Chart GE data by YCharts

TheStreet Ratings team rates General Electric 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 notable return on equity, solid stock price performance and expanding profit margins. We feel these 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:

  • GENERAL ELECTRIC CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL ELECTRIC CO increased its bottom line by earning $1.38 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.64 versus $1.38).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Industrial Conglomerates industry and the overall market on the basis of return on equity, GENERAL ELECTRIC CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • GE's share price has surged by 28.86% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The gross profit margin for GENERAL ELECTRIC CO is rather high; currently it is at 51.58%. Regardless of GE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.02% trails the industry average.
  • GE, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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