How Has General Electric Stock Fared ahead of 1Q16 Earnings?



General Electric’s stock performance

General Electric (GE) stock was range-bound from January 2015 until June 2015. GE has outperformed since mid-2015. The outperformance comes on the back of its plan to take away a significant portion of its GE capital business.

GE Capital is General Electric’s financial arm. It provides commercial lending and leasing and a host of other financial services (IYG) to various retail and industrial customers. GE has sold off many divisions within GE Capital. GE Capital’s revenue contribution to total sales declined from 28% ($42.7 billion) in 2014 to 9% ($10.8 billion) in 2015.

GE has risen ~22% since April 2015. The Industrial Select Sector SPDR ETF (XLI) fell 0.5% for the same period.

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General Electric’s peer performance

From the beginning of 2016 to date, industrial (XLI) stocks have been performing well due to hopes of global growth and better earnings in the second half of 2016 earnings compared to the first half.

Year-to-date, shares of 3M (MMM), Honeywell International (HON), and Illinois Tool Works (ITW) have performed well. They’ve generated returns of 13.5%, 9.2%, and 13.3%, respectively.

About General Electric

Incorporated in 1892, General Electric is one of the largest and most diversified industrials and financial services corporations in the world. Currently, it serves customers in about 175 countries and employs approximately 305,000 people worldwide.

General Electric broadly operates in two segments: industrial businesses and financial services. These segments contributed about 91% and 9%, respectively, to consolidated revenue in fiscal 2015.

GE has been successful in reducing its dependence on financial services. What are GE’s guidelines for fiscal 2016? We’ll look at that in the next part.


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