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GE Receives Project Financing for Power Plant Expansion

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General Electric Company’s (GE - Free Report) Energy Financial Services unit recently received $150 million project financing for refinancing and expansion of the Los Guindos open-cycle thermoelectric power plant, based in central Chile. Notably, GE Energy Financial Services holds a 75% stake in the power plant, with the remaining being owned by The Ingelec Group.

While Sumitomo Mitsui Banking Corporation (SMBC) led the latest transaction in alliance with MUFG and Natixis, Banco BICE provided a VAT facility, denominated in peso. Currently, the financing is being utilized for the expansion of the power plant as well as optimization of the capital structure.

Under the expansion plan, installation of a second GE 9E.03 turbine — powered by dual gas-liquid fuel combustion system, A39 generator and DLN emissions control — will help in doubling the overall capacity of the power plant to around 275 megawatts.

General Electric has increased its investments in key industrial businesses through restructuring, state-of-the-art technology and R&D initiatives to focus more on its core business activities. Moving ahead, the company intends to focus on three core segments — power, aviation and healthcare equipment. These segments are anticipated to generate higher margins and contribute to long-term growth.

However, in the past six months, shares of this Zacks Rank #4 (Sell) company have lost 42.7%, wider than the industry’s decline of 11.8%.

General Electric’s margins are being hurt by headwinds in the Power and Transportation segments. However, the company’s stringent cost-cutting and simplification initiatives are likely to improve profitability moving ahead. Also, the company’s solid free cash flow allows it to invest in product innovations, acquisitions as well as business development, thus extending the opportunity to increase its market share.

The company recently signed an agreement with private equity firm, Veritas Capital, to sell a trio of its health-care information technology business for $1.05 billion in cash. This divestment is a part of General Electric’s initiatives to streamline the company’s operations and sharpen its focus on smart diagnostics and connected devices.

Stocks to Consider

Some better-ranked stocks from the same space are Leucadia National Corporation , Raven Industries, Inc. and Federal Signal Corporation (FSS - Free Report) . Each of the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Leucadia National surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 6.6%.

Raven Industries outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 20.2%.

Federal Signal surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 16.5%.

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