One Reason GE Stock Is Up

Posted on Jun 3, 2015


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NEW YORK (TheStreet) — Shares of General Electric (GE – Get Report) are increasing 0.71% to $ 27.53 in afternoon trading on Wednesday after the company today unveiled Bright StikTM, a new LED light bulb that will help consumers save energy and costs.

“The biggest barrier for consumers and contractors to transition from CFL to LED is the upfront cost, but now, energy-conscious shoppers who want superior quality of light have a realistic option,” Chief Innovation Manager Tom Boyle said. 

Introducing the 60-watt light bulb is the company’s latest effort to help consumers go from compact fluorescent lamp (CFL) to light emitting diode, or LED lighting, according to the company.

The product has a rated life of 15,000 hours, lasts close to 14 years, and costs 10 cents per month, based on three hours of operation per day.

Industry estimates show that by 2020, more than 50% of U.S.’s residential light bulb sockets will be LED, the company said.

Separately, TheStreet Ratings team rates GENERAL ELECTRIC CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

“We rate GENERAL ELECTRIC CO (GE) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.”

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for GENERAL ELECTRIC CO is rather high; currently it is at 51.25%. It has increased from the same quarter the previous year.
  • Net operating cash flow has increased to $ 6,090.00 million or 22.75% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.69%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.7%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. Weakness in the company’s revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio is very high at 3.24 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Industrial Conglomerates industry and the overall market, GENERAL ELECTRIC CO’s return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: GE Ratings Report