Why GE (GE) Is Up Early

NEW YORK (TheStreet) -- General Electric  (GE) is higher early Monday following the news Friday that it was spinning off its North American retail finance business in an initial public offering. 

The move, which the company announced back in November, was made official last Thursday after GE filed for the spinoff. The business handles credit services for large retailers like Wal-Mart and Gap through private label credit cards and gift cards. The new company will be named Synchrony Financial

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GE rose 1.35% to $25.45 on Monday.

TheStreet Ratings team rates GENERAL ELECTRIC CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate GENERAL ELECTRIC CO (GE) a BUY. This is driven by some important positives, 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, increase in stock price during the past year, good cash flow from operations 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:

  • GE's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 2.7%. 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 19.5% 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 $1.47 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.47).
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has slightly increased to $11,417.00 million or 1.45% when compared to the same quarter last year. Despite an increase in cash flow, GENERAL ELECTRIC CO's cash flow growth rate is still lower than the industry average growth rate of 22.78%.
  • The gross profit margin for GENERAL ELECTRIC CO is rather high; currently it is at 50.27%. 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 8.18% trails the industry average.
  • You can view the full analysis from the report here: GE Ratings Report
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