General Electric Co. - Momentum

Mega cap General Electric Co. (GE) is trading like a small cap, with shares recently hitting a new multi-year high on the company’s strong Q4 results from early January. With estimates on the rise and a bullish growth projection, this Zacks #1 rank stock is a smorgasbord of momentum.

Company Description

General Electric is a conglomerate that operates in 5 different business segments including financial services, technology and media. The company was founded in 1892 and has a market cap of $200 billion.

Shares of GE snapped higher on Jan 21 after the company reported strong Q4 results that easily beat expectations.

Fourth-Quarter Results

Revenue for the period was up 1% from last year to $41.4 billion, its first y-o-y revenue gain in nine quarters. Earnings also looked good, coming in at 36 cents, 13% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 16% over the last four quarters.

GE’s industrial segment led the way, with revenue up 4% from last year as orders were up 12%. Its energy infrastructure was also strong, with overall orders up 4%.

GE Capital was another bright spot, a segment that struggled through the financial crisis of 2008 and 2009. The segment posted net income of $1.1 billion, a $1 billion increase from last year as volumes rose 12%.

Financial Profile

With operating cash flow of $4.6 billion from its Industrial segment, GE was able to boost its cash and equivalents to $79 billion.

Estimates

The analysts were encouraged by the results, pushing the current-year estimate 3 cents higher to $1.33. The next-year estimate is pegged at $1.62, a bullish 22% growth projection.

Valuation

But in spite of the solid gains, GE still has value, trading with a forward PEG Ratio (PE/Growth) of .72, well below the benchmark for value of 1.

6-Month Chart

On the chart, GE has been climbing since early December, with shares recently surging on the good quarter. Look for support from the longer-term trend line on any weakness, take a look below.