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Here's Why General Electric (GE) Should Grace Your Portfolio
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General Electric (GE - Free Report) is gaining momentum on the back of strong performance of the Aerospace segment owing to continued recovery in the commercial market. Segmental revenues and orders climbed 22% year over year in 2022 due to robust consumer demand.
In March, this Zacks Rank #2 (Buy) company provided a bullish long-term view for the Aerospace segment. For 2025, the company expects the segment’s revenues to increase in the low-double digits to mid-teens. For the long term, General Electric predicts mid-single to high-single-digit revenue growth for the Aerospace segment. It expects continued margin expansion for the unit over the long term.
After months of softness, a rebound in demand at the Power segment should foster GE’s growth. Encouragingly, onshore orders in North America more than doubled in the fourth quarter. Higher aeroderivative unit shipments drove an 8% increase in segmental revenues in the fourth quarter. The company expects low single-digit revenue growth for the Power segment in 2023 driven by Gas Power services.
General Electric’s investments in innovation and productivity improvement should fuel its growth. Cost-control measures and pricing actions to tackle inflationary pressure are supporting the margin performance. GE’s adjusted profit margin increased 160 basis points organically in 2022. For 2023, management expects General Electric’s organic revenues to increase in high-single digits.
General Electric’s commitment to reward its shareholders through dividends and share buybacks are encouraging. In March 2022, the company’s board of directors authorized a share repurchase program of up to $3 billion. GE bought back approximately 13 million shares for $1 billion in 2022 under this authorization. In 2022, the company paid out dividends worth $639 million to shareholders, up 11.1% year over year.
General Electric’s portfolio reshaping actions should facilitate its growth. The company has been acquiring businesses to expand operations while simultaneously divesting non-core operations to direct resources to key areas of growth. In January 2022, the company completed the acquisition of Opus One Solutions Energy Corporation. The Opus One buyout enhanced GE Digital’s capabilities to support the use of renewable and distributed energy resources.
General Electric divested the GE Capital Aviation Services business in November 2021, the lighting business in July 2020 and the BioPharma business in March 2020. Benefits from restructuring initiatives are aiding the company’s bottom line.
In November 2021, General Electric announced that it would split its businesses into three independent companies — comprising GE Healthcare, GE Aviation and GE Vernova —combining the operations of GE Digital, Renewable Energy and GE Power (to be complete in early 2024). The separation has been structured as tax-free spin-offs and is intended to strengthen the operating performance and the financial position. This January, GE completed the separation of its healthcare unit. General Electric will operate as an aviation-focused company starting in early 2024.
Amid the positives, shares of General Electric have rallied 50% in the past six months compared with the industry’s 5.6% increase.
Image Source: Zacks Investment Research
Other Key Picks
Some other top-ranked stocks worth considering are as follows:
Deere has an estimated earnings growth rate of 31% for the current fiscal year. The stock has gained 20% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of 7% for the current year. The stock has rallied around 29% in the past six months.
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Here's Why General Electric (GE) Should Grace Your Portfolio
General Electric (GE - Free Report) is gaining momentum on the back of strong performance of the Aerospace segment owing to continued recovery in the commercial market. Segmental revenues and orders climbed 22% year over year in 2022 due to robust consumer demand.
In March, this Zacks Rank #2 (Buy) company provided a bullish long-term view for the Aerospace segment. For 2025, the company expects the segment’s revenues to increase in the low-double digits to mid-teens. For the long term, General Electric predicts mid-single to high-single-digit revenue growth for the Aerospace segment. It expects continued margin expansion for the unit over the long term.
After months of softness, a rebound in demand at the Power segment should foster GE’s growth. Encouragingly, onshore orders in North America more than doubled in the fourth quarter. Higher aeroderivative unit shipments drove an 8% increase in segmental revenues in the fourth quarter. The company expects low single-digit revenue growth for the Power segment in 2023 driven by Gas Power services.
General Electric’s investments in innovation and productivity improvement should fuel its growth. Cost-control measures and pricing actions to tackle inflationary pressure are supporting the margin performance. GE’s adjusted profit margin increased 160 basis points organically in 2022. For 2023, management expects General Electric’s organic revenues to increase in high-single digits.
General Electric’s commitment to reward its shareholders through dividends and share buybacks are encouraging. In March 2022, the company’s board of directors authorized a share repurchase program of up to $3 billion. GE bought back approximately 13 million shares for $1 billion in 2022 under this authorization. In 2022, the company paid out dividends worth $639 million to shareholders, up 11.1% year over year.
General Electric’s portfolio reshaping actions should facilitate its growth. The company has been acquiring businesses to expand operations while simultaneously divesting non-core operations to direct resources to key areas of growth. In January 2022, the company completed the acquisition of Opus One Solutions Energy Corporation. The Opus One buyout enhanced GE Digital’s capabilities to support the use of renewable and distributed energy resources.
General Electric divested the GE Capital Aviation Services business in November 2021, the lighting business in July 2020 and the BioPharma business in March 2020. Benefits from restructuring initiatives are aiding the company’s bottom line.
In November 2021, General Electric announced that it would split its businesses into three independent companies — comprising GE Healthcare, GE Aviation and GE Vernova —combining the operations of GE Digital, Renewable Energy and GE Power (to be complete in early 2024). The separation has been structured as tax-free spin-offs and is intended to strengthen the operating performance and the financial position. This January, GE completed the separation of its healthcare unit. General Electric will operate as an aviation-focused company starting in early 2024.
Amid the positives, shares of General Electric have rallied 50% in the past six months compared with the industry’s 5.6% increase.
Image Source: Zacks Investment Research
Other Key Picks
Some other top-ranked stocks worth considering are as follows:
Deere & Company (DE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Deere has an estimated earnings growth rate of 31% for the current fiscal year. The stock has gained 20% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of 7% for the current year. The stock has rallied around 29% in the past six months.