General Electric Mired in Place as Dow’s Worst Stock of 2017

By Paul Ausick Updated Jan 12, 8:21AM EST · Published Sep 9, 9:15AM EDT

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General Electric Co. (NYSE: GE) had a tough week. On both Thursday and Friday the company’s stock posted new 52-week lows, and the shares closed the week down about 5.3% compared to the previous week. GE easily kept its position as the worst-performing stock among the 30 equities that comprise the Dow Jones Industrial Average. Shares have lost 24.6% for the year to date.

This is GE’s eighth consecutive week as the Dow’s worst performer. The company still has a big lead over the second worst stock, International Business Machines Corp. (NYSE: IBM), which is down 14.2% for the year. Third-worst Exxon Mobil Corp. (NYSE: XOM) now is down 12.7%.

The only news of note from GE last week was its sale of its remaining 15.5% state in Penske Truck Leasing for $674 million. The interesting bit about that is that the sale leaves GE with essentially three relatively small pieces of its once-huge GE Capital business.

What GE has chosen to retain of GE Capital is the airplane leasing business — GE Capital Aviation Services (GECAS) — the Industrial Finance business, and the Energy Financial Services business.

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At the end of 2016, Airfinance Journal listed GECAS as the world’s largest aircraft lessor by number of aircraft (1,450). In addition to leasing the planes, GECAS helps customers finance the leases. GE also supplies aircraft engines to Boeing and Airbus, and it is in the company’s best interests to help airlines lease new planes that use GE jet engines. The other two remnants of GE Capital likewise help GE’s customers finance purchases of other GE products.

For example, according to GE’s annual report, Energy Financial Services “invests in long-lived, capital intensive energy projects and companies by providing structured equity, debt, leasing, partnership financing, project finance and broad-based commercial finance.” GE’s recently completed acquisition of Baker Hughes is another piece the company has added to its power and renewable energy businesses. Helping customers finance these big-ticket purchases is a core vertical business for GE.

GE’s share price struggles result from the fact that none of this is likely to move the needle much in terms of revenues and profits. The company also touts its Internet of Things initiatives, but these too are not likely to produce a significant growth pop at a company with a market cap of $206 billion and 2016 sales of nearly $124 billion.

GE’s shares closed down about 0.8% Friday, at $23.82 in a 52-week range of $23.58 to $32.38. The consensus 12-month price target for the stock remained at $29.31.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.