General Electric (General Electric) envisions the future as an aerospace and defense company, moving away from the diversified conglomerates of the past. Is GE stock a buy after breaking six-year high?
On November 14, General Electric announced the boards of directors of GE Vernova and GE Aerospace.
A day earlier, Dubai-based airline Emirates announced a $52 billion order for 95 Boeing 777 aircraft, as well as an order for 202 GE9X engines and parts to power the 777 fleet. GE Aerospace says the GE9X is the most advanced, efficient and quiet jet engine ever produced.engine seen before teething problems.
On October 24, the industrial giant delivered another Quarterly beat and raise reportsIts aerospace, natural gas power generation and renewable energy sectors have made progress or further improved.
The company plans to spin off its power and renewable energy business as GE Vernova in the second quarter of 2024.This will make “New GE” GE Aerospacebecoming an independent company.
GE’s healthcare spin-off, GE Healthcare Technologies (GEHC) was listed on Nasdaq in January. GE had announced a three-way split in 2021, splitting into independent energy, healthcare and airlines. The move comes after the company divested assets ranging from lighting to locomotives.
Industrial companies are dealing with supply chain issues and macro uncertainty. Other headwinds include rapidly rising inflation and wars in the Middle East and Europe.
GE stock surges
GE shares rose on Thursday, closing flat at 117.96 buy someShares are in buy range at 123.86, according to MarketSmith data. They broke above the trend line entry earlier.
GE shares also hit their highest level since November 2017 on Thursday, when the industrial conglomerate struggled Cause baby to learn to walk Eventually broke up. Said he was considering breaking up January 2018.
this relative strength line GE stock hit a high on the weekly chart, although it’s just below its consolidation peak on the daily chart. The RS line (the blue line on the IBD chart) tracks a stock’s progress relative to the S&P 500 Index.
Year to date, GE’s stock price has soared more than 81%. In November, overall share prices rebounded from the retracement of the previous two months.
General Electric owns a RS rating 94 stocks, meaning it outperformed 94% of the stocks in IBD’s database last year.
GE stock wins on key earnings and sales metrics EPS Rating 77 out of 99 best, and SMR rating Grade C, ranging from A (best) to E (worst). The EPS rating compares a company’s earnings per share growth to all other companies. The SMR rating reflects sales growth, profit margins and return on equity.
According to the company’s data, GE’s profits surged 53% and revenue grew 3% in 2022 2022 Annual Report.October 24, General Electric’s third-quarter results beat expectations and raised financial targets, driven by the strength of its aerospace business.
In the third quarter, GE’s renewable energy unit also reduced losses, and profits from its gas-fired power generation unit increased significantly.
Free cash flow (FCF) is a closely watched metric. GE management now expects FCF to reach $5.1 billion in 2023, up from the previous forecast of $4.6 billion.
Of 18 analysts on Wall Street, 11 rate GE stock a buy, seven hold it and none are a sell.
General Electric Aerospace
Sometimes called GE’s “crown jewel,” the aerospace division makes jet engines and aerospace systems for aircraft manufacturers, including boeing company (Bachelor). GE Aerospace also operates a lucrative engine repair and maintenance aftermarket business.
Aircraft deliveries and orders have been negatively impacted by travel restrictions imposed to stem the spread of Covid-19 during the pandemic.
Aerospace suppliers are also struggling to deliver parts and equipment on time due to shortages of semiconductor chips and plastics caused by the epidemic, and the costs of aluminum and steel have also risen.
For GE Aerospace, many of the headwinds have eased.
The aerospace sector continues to benefit from a resurgence in commercial air travel and growth in defense orders.
General Electric’s Competitors
Britain’s Raytheon and Rolls-Royce are the main competitors in jet engines; General Electric competes with Siemens Energy in electric power and Honeywell in aerospace systems.
Is GE stock a buy?
General Electric is preparing for a dramatic transformation, moving away from its diversified past and betting heavily on a future centered on aviation. The soon-to-be-formed General Electric Aerospace Company continues to increase orders for jet engines.
However, The jet engine business is highly cyclicalGlobally, recession fears linger, and rising interest rates to control inflation are putting pressure on many economies. The Russia-Ukraine war and the Israel-Hamas war have added to business uncertainty.
These are challenging headwinds for an industrial giant like GE.
From a technical perspective, GE’s stock price gained buying points on Thursday, with a strong RS line reinforcing the breakthrough. GE’s stock price continued to outperform the market amid the stock market rebound in November.
Bottom line: GE stock is a buy.
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