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Bear of the Day: General Electric (GE)

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General Electric (GE - Free Report) is one of the largest and the most diversified technology and financial services companies in the world. Its products and services range from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, and industrial products.

Lackluster Results

The company reported adjusted earnings of 29 cents per share, missing the Zacks Consensus Estimate of 50 cents by 41%. Revenues were however ahead of our estimate.

The company also significantly lowered its guidance for FY 2017. The company currently expects operating earnings of $1.05–$1.10 per share, significantly down from earlier guidance of $1.60-$1.70.

Falling Estimates

Analysts have lowered their estimates for the company after weak earnings. Zacks Consensus Estimates for the current and the next fiscal year have fallen to $1.44 per share and $1.47 per share from $1.56 and $1.66 respectively, 30 days back.

 

General Electric Company Price, Consensus and EPS Surprise

General Electric Company Price, Consensus and EPS Surprise | General Electric Company Quote

A Dividend Cut in the Cards?

The company deferred its dividend decision for 2H, while announcing earnings results. The CEO said he would review the quarterly dividend, leading many analysts to believe that a dividend cut may be coming soon considering company’s cash flow position.

GE currently has a dividend yield of 4.3% and many income focused funds and investors hold the stock due to its juicy yield. Any cut in dividend could lead to further sell-off.

The Bottom Line

The stock has fallen to a Zacks Rank #5 (Strong Sell) after results as analysts continue to slash their estimates. Additionally, the stock has Style Score of “F” for Value, Growth as well as VGM. Investors should avoid the stock for the time being.

 

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