Why Moody's (MCO) Reaffirmed General Electric's (GE) Rating Today

NEW YORK (TheStreet) -- General Electric (GE) had its ratings reaffirmed at "Aa3 senior unsecured, Prime-1 short-term" by analysts at Moody's (MCO) today.

GE shares are down -0.2% to $26.70 in early trading on Wednesday.

The reaffirmation follows the news that the company's $17.1 billion bid for Alstom SA's energy assets had received approval from Alstom's board.

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"Assuming regulatory hurdles are cleared and the transaction proceeds, the Alstom assets further enhance an already strong position in global power generation for GE, with complementary products, technologies and capabilities that align well with the company's existing portfolio," said Moody's leading GE analyst Russell Solomon.

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 revenue growth, solid stock price performance and reasonable valuation levels. 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 0.1%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • GENERAL ELECTRIC CO's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. 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 $1.47 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.47).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Industrial Conglomerates industry. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $3,527.00 million to $2,999.00 million.
  • You can view the full analysis from the report here: GE Ratings Report
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