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Why General Electric Has Fallen 5.1% since 4Q17 Results

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Jan. 30 2018, Published 8:10 a.m. ET

GE’s 4Q17 earnings

Industrial conglomerate General Electric (GE) announced its 4Q17 earnings on January 24, 2018. The company’s adjusted earnings came in at $0.27 per share, 6% below analyst estimates of $0.29 per share. Even on a YoY (year-over-year) basis, GE’s fourth quarter 2017 adjusted earnings were 41% lower than the $0.46 per share in 4Q16.

The reported EPS was -$1.13 per share in 4Q17 against $0.39 per share in the same quarter of 2016. The fall was due to the $9.5 billion pre-tax and $6.2 billion after-tax charges in the reported quarter related to the legacy insurance business of GE Capital.

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GE stock price reaction

GE stock took a hit when CEO John Flannery disclosed the insurance unit fiasco a few days before the 4Q17 earnings announcement. On January 24, 2018, GE informed the public about the SEC accounting investigation. Soon after that, GE stock started its downward journey to close at $16.13 per share on January 27, 2018. The stock has lost more than 5% since the announcement of 4Q17 results. GE’s peers have given the following returns so far this year:

  • General Electric is down 7.6%.
  • 3M Company (MMM) is up 9.9%.
  • United Technologies (UTX) is up 8.2%.
  • Honeywell International (HON) is up 7.6%.
  • Illinois Tool Works (ITW) is up 7.2%.
  • Boeing (BA) is up 16.4%.

The SPDR S&P 500 ETF (SPY), an indicator of the broad market, was up 7.4% during the same period.

GE’s mess

GE seems to have a mess on its hands. In addition to the SEC troubles, the company has indicated it could have negative free cash flow in 1Q18. In this series, we’ll discuss GE’s segmental performance for 4Q17. We’ll end the series by looking at analysts’ take on GE and its peers after its 4Q17 results.

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