Investing

General Electric Rules as Dow's Worst Performing Stock

Paul Ausick

Published: April 14, 2018 9:10 am

Last Updated: January 12, 2020 1:25 am

General Electric Co. (NYSE: GE) shares managed to post a gain of 3.3% last week, but it wasn’t enough for the industrial giant to move out of its rank as the worst-performing Dow Jones industrial average stock for the year to date. Even with the weekly gain, shares are down 22.7% so far in 2018.

The second-worst Dow stock so far this year is Procter & Gamble Co. (NYSE: PG), which is down 14.7%. That is followed by Walmart Inc. (NYSE: WMT), down 12.9%, Verizon Communications Inc. (NYSE: VZ), down 10%, and Home Depot Inc. (NYSE: HD), down 8.8%.

The Dow added 427.38 points over the course of the past week and ended at 24,360.14, up nearly 1.8% for the short week.

The week got off to a rocky start for the company after JPMorgan analyst C. Stephen Tusa said that GE is the most expensive stock in its sector of the market. The implication, of course, is that the share price has to fall even further.

A second, and more devastating, implication is that the company’s dividend will have to be cut a little, slashed or eliminated. The JPMorgan team does not believe that GE’s 2018 earnings per share forecast of $1.00 to $1.07 has a chance of becoming reality. A “more realistic” estimate, they say, is $0.50 a share.

But the stock price jumped Friday morning following a report from unnamed sources that GE is considering either spinning off one of its divisions or combining assets with other public companies to create hybrid deals. The transportation division (or at least a piece of it) has been on the block for a while now with no takers, and the same can be said of the lighting division.

CEO John Flannery has promised to sell some $20 billion in assets but announced sales so far total less than $4 billion. He has to speed up what has so far been a fairly deliberative (i.e., slow-moving) process.

GE stock closed at $13.49 on Friday, up about 2.4% for the day, in a 52-week range of $12.73 to $30.54. The 12-month consensus price target on the stock is $17.78, unchanged from last week.