The Bullish Case for General Electric Company (NYSE:GE)

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Recently, investment firm Bernstein’s analyst Steven Winoker said in a report that strong cash generation is perhaps the only strong point of General Electric at the moment. General Electric Company (NYSE:GE) shares have lost over 6% over the last 12 months. The analyst believes that General Electric Company (NYSE:GE) cash flow would mainly come from segment profit growth and working capital efficiency in 2017. Winoker has an ‘Outperform’ rating for the stock.

General Electric Company (NYSE:GE) is also a good option for income investors. The company’s dividend has risen from $0.10 per share in April 2010 to $0.24 a share in April 2017, a 140% hike. The company recently increased its quarterly cash dividend to $0.24 per share from $0.23 a share. The company has a dividend yield of 3.2%.

JPMorgan recently reiterated its ‘Underweight’ rating for the stock and lowered its price target to $27, citing problems of shareholders with the company’s CEO Jeff Immelt. But some analysts believe that the departure of Jeff Immelt will be a great catalyst for the stock. Famous investor Nelson Peltz and his hedge fund Trian Partners are pressurizing Immelt to deliver or leave the office. Shareholders of the company have nothing to lose in both cases.


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In a report, Barclays’ analyst Scott Davis recently cited a source inside General Electric Company (NYSE:GE), who he called the “smartest man in the room”. The source claims that a CEO transition alone would result in at least a 5% gain in the stock. He also believes that General Electric Company (NYSE:GE) Baker Hughes deal will bode well for the company and he expects a recovery in oil and gas operations in 2018. In its fourth quarter earnings call, General Electric said that the oil and gas business was stabilizing, especially after the OPEC agreement. U.S. onshore rig increased by 33% in the fourth quarter as compared to the quarter earlier.

General Electric Company (NYSE:GE) plans to slash its expenses in 2017. It wants to cut its unprofitable business arms which have become extra baggage. Its massive $10 billion acquisition of the French Turbine maker Alstom is also expected to start bearing fruit this year. General Electric has planned a divestiture of its financial services business. It also sold its water unit to Suez SA for $3.4 billion. These measures will give a boost to the company’s core performance in the coming months.

General Electric Company (NYSE:GE) is also expected to take huge benefits from President Trump’s new tax initiatives. Similarly, the company expects double-digit organic revenues and robust growth in operating profits in its renewables business.