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General Electric Shares Face Historical Fall amid Net Income Increases and Low Revenue

Last week, General Electric Company reported that in the fourth quarter, its net income had increased 35.4% compared to the same period last year.

General Electric Shares Face Historical Fall amid Net Income Increases and Low Revenue

This, the company said, can be attributed to the robust performance in its renewable energy and power divisions. Even then, GE’s revenue for the same period declined 2.36%.

The conglomerate’s shares fell drastically following the earnings report, a slump that has not been witnessed since September 9 last year. So far, this is GE’s sixth consecutive loss. The stock fell 2.18% coming down to $30.53 after slumping as slow as $30.30

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Lost market value

In the week ending January 22, GE shares lost up to 2.65% of their value in the market compared to a week earlier, marking a second period of consecutive decline as well as making this among the worst performance since the week ending November 6.

Currently, in the month of January, GE’s stock slump continued to drop 3.39% so far after a 2.73% increase in stock prices last December. All throughout 2016, shares of the industrial giant increased 1.44%.

In the last quarter of 2016, net income from the company’s continuing operations attributable to shareholders grew to $3.48 billion or an equivalent of 39 cents per share, up from $2.57 billion or an equivalent of 26 cents per share in the same period in the previous year.

Analysts remain cautious

During the fourth quarter, GE earnings per share fell 2% down to 46 cents in accordance with the overall forecasts by market analysts. In the same period, total revenue fell to $33.1 billion from $33.9 billion in the same quarter in the previous year. Analysts had predicted a lesser drop of $33.6 billion.

Sales in the industrial giant’s power sector increased by 20% to reach $8.5 billion in the last quarter of 2016. However, sales in the company’s oil and gas business fell 43% down to $411 million in the same period.

Last December, GE projected that 2017 revenues would grow at a 3% to 5% rate, not including acquisitions. The company has continued to reiterate this projection.

Analysts however continue to be cautious about the conglomerate after the earnings report. Prior to the report, Thomas Reuters projected a share price of $34.27 but later lowered its projections down to $34.13.

Goldman Sachs emphasized its neutral rating with a price point of $30 while UBS had buy rating lowering GE’s share price target to $35 up from $36.

Meanwhile, Merrill Lynch emphasized a buy rating with a price target of $37, noting that the revenue miss could be attributed to GE’s shipments in its power business. Even then, the industrial giant’s margin and cash flow improved but the outlook by analysts is still at the lower end.

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