Friday, 17 April 2015

GE - generally fine

Whilst the broader market saw significant weakness to end the week, there was notable early strength in General Electric (GE).. after earnings came in fine. GE settled -0.2% @ $27.23. Near term outlook is for renewed upside into May. First upside target is the $30/32 zone.

GE, daily

GE, monthly


First.. some details on Q1 earnings...

EPS (pre items*) 31 cents (33 cents previous year) vs market exp' of 30. Rev' was a major miss, $29.4bn vs market exp' of $34bn.

So... roughly $1.25 EPS a year, giving a PE of around 21... somewhat above the market average. Regardless, with a monstrous stock buy back of $50bn, along with the planned asset disposal of GE Capital (should raise around $25bn), the long term outlook appears fine.

*GE wrote off $16bn from GE capital.. so.. technically, a Q1 loss of $13.6bn... $1.35 a share. As ever.. the finer details are always important to consider.

Long term upside

GE looks set for very significant upside across the next few years. The disposal of GE capital (which almost took the company into bankruptcy in the 2008/09 crash) is a good thing.

The stock buy back will no doubt help to largely negate all moderate down cycles for the next THREE years.

*I am very bullish on GE (and be default, the Dow), the Aug' 2000 high of $41.42 looks a viable target by mid/late 2017.