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General Electric Displays Bright Prospects, Risks Persist

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On Apr 1, we issued an updated research report on General Electric Company (GE - Free Report) .

Over the past three months, this Zacks Rank #3 (Hold) stock has returned 24.1%, outperforming the industry’s rally of 19.5%.

Existing Scenario

General Electric intends to become more competent by focusing on core businesses. In this regard, the company is focusing on strengthening its Power business, which dented its performance over the last few quarters. Also, it intends to consolidate GE Power's headquarters structure to ensure these units can best serve their customers. In addition, it intends to resolve the external and internal challenges through better inventory and material management, product development and delivery, as well as billings and collections.

Currently, the company has also been focusing on a disciplined financial strategy to reduce leverage at both its industrial businesses and GE Capital. It is worth noting here that the company substantially completed $20 billion of asset sale planned for GE Industrial in 2018. Also, the company’s efforts are on track to reduce exposure to the GE Capital business.

Moreover, it believes that healthy demand for onshore wind equipment, rising popularity of LEAP engines and F414 engines will boost General Electric's aggregate revenues in the quarters ahead.

However, the company is facing unfavorable pricing conditions in some long-term contracts, delay in execution of projects and headwinds related to the Alstom joint venture. These issues might impact its performance.

Key Picks

Some better-ranked stocks in the same space are Federal Signal Corporation (FSS - Free Report) , United Technologies Corporation (UTX - Free Report) and Macquarie Infrastructure Company (MIC - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Federal Signal surpassed estimates in each of the trailing four quarters, the average being 21.65%.

United Technologies exceeded estimates in each of the trailing four quarters, the average being 14.87%.

Macquarie surpassed estimates twice in the trailing four quarters, the average being 0.51%.

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