General Electric Company (GE - Free Report) has outperformed the Zacks categorized Diversified Operations industry with an average return of 8% compared with 7.1% for the latter, over a period of 30 days. In addition, over the same time frame, earnings estimates for the current year have been in line.
The company recently sold its shares in GE Capital Interbanca S.p.A, Italy to Banca IFIS S.p.A. This transaction represents ending net investment (ENI) of approximately $3.6 billion, as of third-quarter 2016.
Headquartered in Milan, GE Capital Interbanca is an Italian merchant bank that works with medium-sized firms to provide lending and financing transaction services. It consists of 10 branches spread across Italy. In Mar 2008, the bank was purchased from Santander Group by GE Commercial Finance.
General Electric is poised for long-term growth. In order to focus more on its core business activities, the company has started exiting the financial business and has increased its investments in key industrial businesses through restructuring, state-of-the-art technology, and R&D initiatives.
Since Apr 2015, GE Capital has inked sale agreements worth approximately $195 billion in ENI, of which it has already completed deals worth $186 billion till date. By the end of 2016, the company expects to sell $200 million of GE Capital assets across the world. Per the company it is on track to deliver approximately $35 billion of dividends to General Electric under this plan, subjected to regulatory approvals.
The transactions will realign the corporate strategy of the company to a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners. With these restructuring initiatives, General Electric expects operating earnings from the industrial business to aggregate over 90% of its total operating earnings by 2018, up from 58% in 2014.
We continue to be bullish on this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in this industry include Macquarie Infrastructure Corp. (MIC - Free Report) , AO Smith Corp. (AOS - Free Report) and Danaher Corp. (DHR - Free Report) . Both AO Smith and Danaher carry a Zacks Rank #2 (Buy), whereas Macquarie sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Macquarie Infrastructure is currently trading at a forward P/E of 69.3x and has beaten estimates twice in the trailing four quarters for an average positive earnings surprise of 29.6%.
AO Smith has a long-term earnings growth expectation of 10.7% and is currently trading at a forward P/E of 26.7x.
Danaher has long-term earnings growth expectation of 11.9% and is currently trading at a forward P/E of 22.1x.
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