We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Investment Ideas feature highlights: General Electric
Read MoreHide Full Article
For Immediate Release
Chicago, IL – October 31, 2018 – Today, Zacks Investment Ideas feature highlights Features: General Electric (GE - Free Report) .
GE Recovery Derailed by Poor Quarter, Slashed Dividend
A disappointing earnings report that included a massive cut in the dividend, a $22 billion charge and the disclosure that the Department of Justice is investigating the company’s accounting practices has cast doubt on attempts at a turnaround at the iconic American conglomerate General Electric.
Earlier in October, investors cheered the appointment of outsider Larry Culp as CEO, sending shares rallying in what looked at the time like it might be the end of a years-long slide that also saw GE removed from the Dow Jones Industrial Average for the first time in the 133-year history of that index.
The rally was short-lived however, and GE shares sold off hard on Tuesday after the report, losing more than 10% on the session and now hovering just above the $10/share level.
GE cut the dividend to just $0.01/quarter, down from $0.12. The move to a penny – literally the lowest a dividend company can pay - seems like a symbolic attempt to avoid eliminating the dividend altogether. GE has paid a dividend continuously for 119 years. In better times, the yield on GE shares was widely viewed as a safe and predictable source of income for retirees and conservative income investors.
The company expects the move to preserve approximately $3.9B in cash per year.
Revenues and net earnings for Q3 were both lower than analyst estimates, coming in at $29.57B and $0.14/share, respectively - versus Zacks Consensus estimates of $29.88B and $0.21/share.
GE also announced that it would take a $22B charge to goodwill related to underperforming acquisitions in its Power unit. The company appears to have made serious miscalculations about the rate of adoption of renewable energy sources in the market and had bet heavily in the past few years on older fossil fuel technology. The errors led to lagging sales and rising inventory level in the unit.
GE is cooperating with the SEC and DOJ in their investigation into the charge.
GE Power will now be split into two divisions, and the company will continue moving forward with its plans to spin-off its Healthcare businesses and sell its stake in oil and gas company Baker-Hughes.
Recent downward earning estimate revisions earn GE at a Zacks Rank #4 (Sell) and it’s certainly conceivable that the reaction to developments in this report could take that ranking even lower.
On the investor conference call, new CEO Culp – who officially took over on October 1st - was left with the unenviable task of explaining a poor quarter that happened before he took the helm.
Culp acknowledged that “this is not a quarter we are particularly proud of,” but added “we are on the right path to create a more focused portfolio and strengthen our balance sheet.” He also stated that although GE was facing cash constraints – hence the dividend cut – he did not have any plans to raise cash by selling equity.
Culp has an extremely difficult job ahead of him and he seems willing to “rip off the band-aid quickly” by taking temporarily painful steps to put the company on firm financial footing. For investors however, it might be too little, too late as one of the remaining compelling reasons to own the stock – a 4.25% dividend yield – evaporates.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Investment Ideas feature highlights: General Electric
For Immediate Release
Chicago, IL – October 31, 2018 – Today, Zacks Investment Ideas feature highlights Features: General Electric (GE - Free Report) .
GE Recovery Derailed by Poor Quarter, Slashed Dividend
A disappointing earnings report that included a massive cut in the dividend, a $22 billion charge and the disclosure that the Department of Justice is investigating the company’s accounting practices has cast doubt on attempts at a turnaround at the iconic American conglomerate General Electric.
Earlier in October, investors cheered the appointment of outsider Larry Culp as CEO, sending shares rallying in what looked at the time like it might be the end of a years-long slide that also saw GE removed from the Dow Jones Industrial Average for the first time in the 133-year history of that index.
The rally was short-lived however, and GE shares sold off hard on Tuesday after the report, losing more than 10% on the session and now hovering just above the $10/share level.
GE cut the dividend to just $0.01/quarter, down from $0.12. The move to a penny – literally the lowest a dividend company can pay - seems like a symbolic attempt to avoid eliminating the dividend altogether. GE has paid a dividend continuously for 119 years. In better times, the yield on GE shares was widely viewed as a safe and predictable source of income for retirees and conservative income investors.
The company expects the move to preserve approximately $3.9B in cash per year.
Revenues and net earnings for Q3 were both lower than analyst estimates, coming in at $29.57B and $0.14/share, respectively - versus Zacks Consensus estimates of $29.88B and $0.21/share.
GE also announced that it would take a $22B charge to goodwill related to underperforming acquisitions in its Power unit. The company appears to have made serious miscalculations about the rate of adoption of renewable energy sources in the market and had bet heavily in the past few years on older fossil fuel technology. The errors led to lagging sales and rising inventory level in the unit.
GE is cooperating with the SEC and DOJ in their investigation into the charge.
GE Power will now be split into two divisions, and the company will continue moving forward with its plans to spin-off its Healthcare businesses and sell its stake in oil and gas company Baker-Hughes.
Recent downward earning estimate revisions earn GE at a Zacks Rank #4 (Sell) and it’s certainly conceivable that the reaction to developments in this report could take that ranking even lower.
On the investor conference call, new CEO Culp – who officially took over on October 1st - was left with the unenviable task of explaining a poor quarter that happened before he took the helm.
Culp acknowledged that “this is not a quarter we are particularly proud of,” but added “we are on the right path to create a more focused portfolio and strengthen our balance sheet.” He also stated that although GE was facing cash constraints – hence the dividend cut – he did not have any plans to raise cash by selling equity.
Culp has an extremely difficult job ahead of him and he seems willing to “rip off the band-aid quickly” by taking temporarily painful steps to put the company on firm financial footing. For investors however, it might be too little, too late as one of the remaining compelling reasons to own the stock – a 4.25% dividend yield – evaporates.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Follow us on Twitter: https://twitter.com/ZacksResearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com/performance
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.