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General Electric (GE) to Restructure Steam Power Portfolio
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General Electric Company (GE - Free Report) signed a memorandum of understanding (non-binding) to divest certain operations of its nuclear activities to France-based Électricité de France S.A. (or the EDF Group). The to-be-divested business is presently part of GE Steam Power. The financial terms of the transaction have been kept under wraps.
Shares of General Electric lost 2.4% in the last two trading days. It ended the trading session at $96.83 on Feb 11.
The EDF Group plays a vital role in the energy transition. Its focus on nuclear power renewable energy and desire to use new technologies is commendable. Generation, transmission and distribution of electricity are all done by the EDF Group. It also provides energy services.
Inside the Headlines
As noted by General Electric, the to-be-divested business includes Steam Power’s conventional island equipment meant for use in new nuclear power plants. Steam turbine technology for future plants is also considered for the divestiture.
The company will reclassify the above-mentioned businesses as “held for sale” in first-quarter 2022. Some other parts of GE Steam Power, including GE Hitachi Nuclear Energy and service-focused businesses, will be retained by General Electric.
A pretax impairment charge (non-cash) of $700-$800 million related to the transaction will be booked by General Electric. The company also expects to record significant gain upon the transaction completion, expected in the first half of 2023.
It is worth noting here that Steam Power’s revenues totaled $3,241 million in 2021, decreasing 8.9% year over year. It accounted for 19.2% of General Electric’s total segment revenues in 2021.
Zacks Rank, Estimate Trend and Price Performance
With a market capitalization of $106.3 billion, General Electric currently carries a Zacks Rank #5 (Strong Sell). Cost inflation and supply-chain woes, as well as unfavorable movements in foreign currencies, are worrying for the company. Its efforts to restructure its portfolio and strengthen digital businesses are tailwinds.
In the past three months, the company’s shares have lost 9.3% compared with the industry’s decline of 11.5%.
Image Source: Zacks Investment Research
Meanwhile, the Zacks Consensus Estimate for General Electric’s earnings has decreased 32.8% to 41 cents per share for the first quarter of 2022. Likewise, its earnings estimates decreased 11.9% to $3.54 for 2022 and declined 6.6% to $5.24 for 2023 in the past 60 days.
We have discussed the inorganic activities of three other industry players.
Danaher Corporation (DHR - Free Report) acquired Canada-based Vanrx Pharmasystems in February 2021, while Swift Biosciences was added to its portfolio in first-quarter 2021. In August 2021, DHR acquired Aldevron.
In the past 60 days, the Zacks Consensus Estimate for Danaher’s earnings has increased 2.8% for 2022 and 5% for 2023.
Carlisle Companies Incorporated (CSL - Free Report) acquired California-based Henry Company in September 2021. In February 2022, CSL acquired MBTechnology, Inc.
The Zacks Consensus Estimate for Carlisle’s earnings has increased 0.8% for 2022 and 1.4% for 2023.
Honeywell International Inc. (HON - Free Report) acquired Tempe, AZ-based US Digital Designs in December 2021. HON also added Performix in September and Sparta Systems in April.
In the past 60 days, the Zacks Consensus Estimate for Honeywell’s earnings has decreased 5.4% for 2022 and 4.6% for 2023.
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General Electric (GE) to Restructure Steam Power Portfolio
General Electric Company (GE - Free Report) signed a memorandum of understanding (non-binding) to divest certain operations of its nuclear activities to France-based Électricité de France S.A. (or the EDF Group). The to-be-divested business is presently part of GE Steam Power. The financial terms of the transaction have been kept under wraps.
Shares of General Electric lost 2.4% in the last two trading days. It ended the trading session at $96.83 on Feb 11.
The EDF Group plays a vital role in the energy transition. Its focus on nuclear power renewable energy and desire to use new technologies is commendable. Generation, transmission and distribution of electricity are all done by the EDF Group. It also provides energy services.
Inside the Headlines
As noted by General Electric, the to-be-divested business includes Steam Power’s conventional island equipment meant for use in new nuclear power plants. Steam turbine technology for future plants is also considered for the divestiture.
The company will reclassify the above-mentioned businesses as “held for sale” in first-quarter 2022. Some other parts of GE Steam Power, including GE Hitachi Nuclear Energy and service-focused businesses, will be retained by General Electric.
A pretax impairment charge (non-cash) of $700-$800 million related to the transaction will be booked by General Electric. The company also expects to record significant gain upon the transaction completion, expected in the first half of 2023.
It is worth noting here that Steam Power’s revenues totaled $3,241 million in 2021, decreasing 8.9% year over year. It accounted for 19.2% of General Electric’s total segment revenues in 2021.
Zacks Rank, Estimate Trend and Price Performance
With a market capitalization of $106.3 billion, General Electric currently carries a Zacks Rank #5 (Strong Sell). Cost inflation and supply-chain woes, as well as unfavorable movements in foreign currencies, are worrying for the company. Its efforts to restructure its portfolio and strengthen digital businesses are tailwinds.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past three months, the company’s shares have lost 9.3% compared with the industry’s decline of 11.5%.
Meanwhile, the Zacks Consensus Estimate for General Electric’s earnings has decreased 32.8% to 41 cents per share for the first quarter of 2022. Likewise, its earnings estimates decreased 11.9% to $3.54 for 2022 and declined 6.6% to $5.24 for 2023 in the past 60 days.
General Electric Company Price and Consensus
General Electric Company price-consensus-chart | General Electric Company Quote
Inorganic Activities of Three Other Players
We have discussed the inorganic activities of three other industry players.
Danaher Corporation (DHR - Free Report) acquired Canada-based Vanrx Pharmasystems in February 2021, while Swift Biosciences was added to its portfolio in first-quarter 2021. In August 2021, DHR acquired Aldevron.
In the past 60 days, the Zacks Consensus Estimate for Danaher’s earnings has increased 2.8% for 2022 and 5% for 2023.
Carlisle Companies Incorporated (CSL - Free Report) acquired California-based Henry Company in September 2021. In February 2022, CSL acquired MBTechnology, Inc.
The Zacks Consensus Estimate for Carlisle’s earnings has increased 0.8% for 2022 and 1.4% for 2023.
Honeywell International Inc. (HON - Free Report) acquired Tempe, AZ-based US Digital Designs in December 2021. HON also added Performix in September and Sparta Systems in April.
In the past 60 days, the Zacks Consensus Estimate for Honeywell’s earnings has decreased 5.4% for 2022 and 4.6% for 2023.