GE Stock Price Plummets To 9-Year Low
Bad decisions leading to dividend slashes.
GE stock price (NYSE: GE) has plummeted 8.8 percent, trading below $10 per share on Tuesday. The plummet came after many Wall Street analysts said that lowering the stock dividend to a penny a share may be the start of tough times for General Electrics. GE’s new CEO, Larry Culp, gave the announcement of the dividend decrease, news which most investors did not take well to.
For investors, this is what you should know about GE in recent times.
- Charged $22 billion in Q3 due to acquisitions in GE’s power business.
- SEC and DOJ are looking further into GE’s accounting practices due to the charge.
- Splitting its power business into two different businesses.
- Reported losses in Q3 that were below Wall Street projections.
- Aviation unit profits up 25 percent from last year.
- Expects to save $3.9 billion is cash each year from dividend slash.
GE Stock Price Analysis
GE posted Q3 revenue and earnings that fell short of analyst predictions. Before the earnings call was made, GE stock price rallied at first by around 2.3% in premarket trading.
After the earnings call at 8 a.m EST the stock fell significantly.
On Tuesday, GE shares tanked to levels not seen since the financial crisis in 2009. The GE stock price dropped as low as $9.87, in 2009 the stock price hit $9.80. In the trading day the GE share price bounced back to $10.18, which made Tuesday the worst single day of trading since March 2009.
GE share price has fell 23.5% in the last three months, 51% in the last year. For comparison, the S&P 500 index has gained 4.0% in the last 12 months. So, it is clear to see that GE is underperforming.
On Tuesdays earnings call, CFO Jamie Miller said that the issues relating the company’s power business “will persist longer and with deeper impact” than first expected.
This uncertainty from is causing investors to sell-off GE stock.
Another reason for investors to be weary of GE stock is that the SEC are investigating the “large goodwill impairment charge” for GE Power.
GE has been posting a dividend for 119 years, slashing it to just a penny a share. In an attempt to aid GE’s debt-laden balance sheet, Larry Culp announced that quarterly dividends would go from 12 cents a share to 1 cent a share starting 2019. The savings made from lowering dividend payouts will save around $3.9 billion a year.
Analysts have been predicting that GE would be slashing dividends, although no one predicted one cent per share drop.
GE has been recognized for many years as a company that prides itself on a strong dividend. Although, in recent quarters that has not been the case… Last November we saw GE dividend cut by half. For long-term investors, this may be time to reconsider GE as a retirement stock.
Due to the success of U.S stocks, dividend cuts are uncommon. Most companies are increasing their dividend payouts each year by a stable amount.
GE Stock Price Prediction
Our analysts give GE stock price a target of $13.
GE stock rating: HOLD
General Electric’s stock price prediction: Highs of $27. Lows of $9.40.
GE did not lower its earnings forecast for this year from the recent $1.07 per share. Analysts have lowered estimates for adjusted earnings to 88 cents per share on average.
A spokeswoman at GE said that the company will not be sticking to previous targets, but not announcing new ones yet.