GE stock closed trading at $67.54+3.94 at close: October 4 04:00PM EDT
With a 5.4% rise by 12:14 p.m. ET on Tuesday, General Electric (NYSE:GE) topped advances among large-cap industrial stocks as U.S. equity markets rose for a second day.
Following the JOLTs report for August, which showed 10.053 million job vacancies as opposed to the estimated 10.755 million, concerns that businesses are having trouble filling positions have subsided considerably. The Federal Reserve may be persuaded to take a more cautious approach to rate hikes if the employment market softens and inflation falls.
Big-cap industrial firms are among the holdings of the Industrial Select Sector SPDR ETF (NYSEARCA:XLI), which increased by around 3.1% by Tuesday’s midday. The increase will be the most since July 19 if it continues through the closing bell.
General Electric (GE) Stock Moves -0.31%: What You Need To Know
The results for the third quarter will be announced on October 25 by General Electric (NYSE:GE). There may, unfortunately, be some negative news forthcoming based on management’s most recent presentations. Nevertheless, investing entails purchasing a stock for a quarter or two, and there are many reasons to remain upbeat regarding the stock’s long-term prospects.
How important is it?
When a firm reduces expectations, as GE may do in its forthcoming earnings release, it is never good news, but there is a need for some background information in this situation. I’ll make three points.
First, management stated that “two-thirds” of the second quarter’s shortfall was caused by timing concerns during the earnings call. Political unpredictability, particularly in the onshore wind market in the United States, has an impact on renewable energy orders, accounting for the remaining one-third. The “timing” concerns were caused by growing inventories while being unable to provide goods (GE often produces expensive goods like aircraft engines, gas turbines, medical scanners, and wind turbines), a condition that should be resolved in the future. Therefore, if the products are delivered later, GE will be able to make up for the difference in working capital.
Second, GE’s organic orders growth in the first half was 8% (with a 29% increase in the aviation sector, 5% growth in the healthcare sector, 1% growth in the power sector, and a decline of 11% (in renewable energy). But keep in mind that GE Renewable Energy is consciously taking steps to scale back operations, limit its competition to a few markets, and raise order prices.
Third, GE’s valuation (market cap of $70.7 billion) is so low that it would require a dramatic decrease in FCF projections for 2022 and 2023 for GE to not appear to be an exceptional value stock.
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Author Jowi Kwasu 
