Investing

General Electric Firms Up Grip as Dow's Worst-Performing Stock

Paul Ausick

Published: June 16, 2018 8:17 am

Last Updated: January 11, 2020 10:16 pm

General Electric Co. (NYSE: GE) shares lost about 4.5% last week, solidly establishing the industrial giant as the worst performer among the Dow equities for the year to date. So far in 2018 the shares have lost 23.8%.

The second-worst Dow stock so far this year is The Procter & Gamble Co. (NYSE: PG), down 15.8%; followed by Walmart Inc. (NYSE: WMT), down 15.2%; 3M Company (NYSE: MMM), down 12.9%; and Johnson & Johnson (NYSE: JNJ), down 12.3%. Of the 30 Dow stocks, 15 are showing a loss to date in 2018.

The Dow dropped more than 225 points over the course of the past week to close at 25,316.53, down about 0.9%. For the year to date the telecom sector has dropped about 11.4%, worst among the 10 market sectors.

The company started the week solidly, primarily as a result of continued troubles at Rolls-Royce’s aircraft engine division. GE’s GEnx engine is a more popular alternative (65% to 35%) than the RR Trent 1000 on the Boeing 787 Dreamliner, that spread could grow unless RR comes up with a lasting fix sooner than its projected timetable of the end of this year.

The week was all downhill beginning Tuesday morning when the shares hit a weekly high of $14.11. There was no particular bit of news out that weighed on the stock. Trump’s meeting with Kim and the announcement of U.S. tariffs didn’t do GE any good, but it didn’t really help any of the big industrial stocks.

There was even some good news related to a possible re-start of the U.S. Export-Import Bank. The Wall Street Journal reported Thursday that Kimberly Reed is expected to get Trump’s nomination for the top job at the Exim bank. That would bring the bank’s board back to a level where it could do what it was designed to do: support exports of U.S. products. While Boeing is the chief beneficiary of the bank, GE’s power division and its oil and gas services business also take advantage of the Exim bank.

That bit of Friday good news was offset by a downgrade of GE’s credit rating from A+ to A at Fitch Ratings. The ratings firm also said the outlook was negative and warned that further downgrades could be on the way.

GE stock closed at $13.30 on Friday, down about 2.5% for the day in a 52-week range of $12.73 to $29.01. The 12-month consensus price target on the stock is $17.50 and the forward price-earnings ratio is 112.68.