GE Stock – Did You Miss General Electric’s (NYSE:GE) 68% Share price Gain?
One way to deal with stock volatility is to ensure you have a properly diverse portfolio. Of course, in an ideal world, all your stocks would beat the market. One such company is General Electric Company (NYSE:GE), which saw its share price increase 68% in the last year, slightly above the market return of around 61% (not including dividends). However, the longer term returns haven’t been so impressive, with the stock up just 1.3% in the last three years.
Check out our latest analysis for General Electric
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year General Electric grew its earnings per share, moving from a loss to a profit.
When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.
We are skeptical of the suggestion that the 0.3% dividend yield would entice buyers to the stock. Unfortunately General Electric’s fell 16% over twelve months. So using a snapshot of key business metrics doesn’t give us a good picture of why the market is bidding up the stock.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
General Electric is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for General Electric in this interactive graph of future profit estimates.
A Different Perspective
General Electric’s TSR for the year was broadly in line with the market average, at 68%. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 9%, which was endured over half a decade. While ‘turnarounds seldom turn’ there are green shoots for General Electric. It’s always interesting to track share price performance over the longer term. But to understand General Electric better, we need to consider many other factors. Take risks, for example – General Electric has 3 warning signs (and 2 which are a bit concerning) we think you should know about.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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