General Electric Company (GE - Free Report) inked a supply agreement with GreenTech Energy Company (a GE-authorized channel partners) to deliver 21 Jenbacher gas engines to be delivered by the end of 2018. This is one of GE’s biggest contracts for Jenbacher engines in the Russian market.
The order includes 10 J320 units, 10 J420 units and a J316 unit — with a total capacity of 26 megawatts. Combined heat and power (CHP) units with single capacity ranging from 1 MW to 1.5 MW on the base of the engines will boost cleaner power generation, particularly around food and beverage, glass, agriculture and chemical processes industries.
CHP can increase the efficiency of GE’s Jenbacher solutions to 90% or more, which is more than 40% greater than what can be achieved with thermal energy alone. These systems optimize the facilities of commercial and industrial businesses, municipalities and other energy-intensive institutions. These CHP solutions are space effective as well.
GE Power is the biggest segment of the conglomerate in terms of corporate revenues. However, the unit has been a drag on earnings in the last few quarters, as global demand increasingly favours renewable energy sources. Also, overcapacity, lower utilization and fewer outages are other factors that are hurting demand. Nevertheless, In 2017, Flannery assured investors that energy, aviation and healthcare will continue to be the focal points of GE’s operations.
It has been nearly five months since Flannery outlined his plan to divest more than $20 billion of assets.
Earlier this month, GE inked an agreement to sell a trio of its health-care information technology businesses to private equity firm Veritas Capital for $1.05 billion. The deal marks one of the first notable portfolio-related moves since Flannery announced the plan to exit at least $20 billion of businesses. However, he has indicated at the possibility of the company’s disintegration into separately-traded businesses.
The overhaul, coupled with cost cuts and cultural changes, encompass Flannery’s attempts to pull GE out of one of the deepest slumps in its 126-year history. The company’s shares have lost 42.9% in the past six months alone, wider than the industry’s decline of 11.6%.
GE is not the only industrial giant which is contemplating a break up of its conglomerate structure. Per recent reports, United Technologies Corporation (UTX - Free Report) is considering a similar move. Recently, German player Siemens AG (SIEGY - Free Report) offloaded a part of its Healthineers medical imaging business through an IPO worth $5.2 billion.
Zacks Rank & Stock to Consider
General Electric carries a Zacks Rank #4 (Sell).
A better-ranked stock in the same space is Federal Signal Corporation (FSS - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Federal Signal has trumped estimates in each of the trailing four quarters and generated an average beat of 16.5%.
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