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General Electric (GE) Up 27% YTD: Will the Momentum Continue?

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General Electric Company (GE - Free Report) has been gaining from strength across its Aerospace segment and gradual recovery in the Power division. This, coupled with the company’s shareholder-friendly policies, primarily drove its shares up 26.6% in the year-to-date period against the industry’s 4.4% decline.

Zacks Investment Research
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Continued recovery in the commercial market is driving growth of GE’s Aerospace segment. Robust consumer demand is boosting orders in the segment. While orders climbed 14% in the first quarter of 2023, revenues increased 25%. Substantial LEAP engine deliveries and shop visit growth drove orders and revenues in the segment.

After months of softness, a rebound in demand at the Power segment augurs well for General Electric. Strength in GE Gas Power heavy-duty gas turbine transactional services and aero derivatives is aiding the Power segment.
The acquisition of Nexus Controls (April 2023), which allows the creation of a single, full-service controls business line for further development of GE’s proprietary Mark Vle controls systems platform, should bolster the Power segment’s growth. The acquisition is aligned with GE’s commitment to invest in leading controls technology and expertise to enhance customer experience.

With higher equipment demand at Grid and Onshore Wind in North America, signs of progress in GE’s Renewable Energy segment are encouraging.

General Electric’s commitment to reward its shareholders through dividends and share buybacks is encouraging. In the first quarter of 2023, the company paid dividends of $203 million and repurchased 3.2 million shares for $0.3 billion.

Will the Uptrend in Shares Continue?

Continued momentum in the commercial aerospace aftermarket driven by an improvement in passenger traffic supports General Electric’s growth going forward. GE expects the Power segment to continue to recover on strength in Gas Power services.  The company expects low single-digit revenue growth for the segment in 2023.

Improving supply chains and strength across key end markets are expected to fuel General Electric’s growth. GE’s bullish guidance for 2023 highlights the buoyant scenario ahead of the company. With market demand remaining strong, General Electric has raised its earnings guidance for 2023. The company now expects adjusted earnings of $1.70-$2.00 per share compared with $1.60-$2.00 anticipated earlier. The company continues to expect high-single-digit revenue growth for the current year.

Zacks Rank & Key Picks

General Electric presently carries a Zacks Rank #3 (Hold).

Some better-ranked industrial stocks are as follows:

Flowserve (FLS - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 2.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowserve has an estimated earnings growth rate of 64.5% for the current year. Shares of the company have gained 18.7% in a year.

Graco (GGG - Free Report) currently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 7.9%, on average.

Graco has an estimated earnings growth rate of 16.4% for the current year. Shares of the company have rallied 36% in a year.

Ingersoll Rand (IR - Free Report) presently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 12.6%, on average.

Ingersoll Rand has an estimated earnings growth rate of 14.8% for the current year. Shares of the company have jumped 35% in a year.

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