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General Electric (GE) reports tomorrow morning. Consensus expectations provide EPS of $ 0.20 on revenues of about $ 29.9 billion. There are rumors that EPS printing could rise to pennies. So for this title, faced with many obvious hurdles, is exceeding expectations important? The fact is that some impacts on forward-looking performance need to be taken into account, and how the new CEO, Larry Culp, is taking care of that, and the level of confidence he can inspire, will be tomorrow's assets in the first exchanges.
Crisis
I think of long-term shareholders. Many of these people probably bought what they considered a fuzzy industrial name that yielded interesting dividends. Some of their peers threw the sponge repeatedly along the way. If I remember correctly, the Oracle of Omaha, Warren Buffet took his leave in the vicinity of $ 27. Nice job, Oracle. The rest in reference to a different crisis a long time ago can only be described as winter soldiers. The Winter Soldier perseveres, but bears many miseries. In terms of investment, these people are eligible. So, is there any hope, anyway? Can any one, namely the new sheriff, spill this dog?
Stephen Tusa
Stephen Tusa, an analyst at JP Morgan, has always been correct on this name. Regarding GE, ignore Tusa at your own risk. Last week, Tusa reiterated its "underweighted" rating on GE and its $ 10 price goal. Tusa said it was important that investors understand that ten dollars "is not the worst case". You may remember that in addition to replacing outgoing CEO, John Flannery, the company had also warned in recent weeks that its cash flow and earnings would not be in line with its objectives for the company. set of the year. The company blamed the inefficient genset (remember the gas turbines that had to be shut down.). There is however … more than that.
Gordon Haskett analyst John Inch subscribed to the "Underweight" rating and a more generous price target of $ 11. Inch cited the potential that the $ 15 billion is already committed because the insurance reserves may be insufficient due to an accounting change announced last summer. And now?
The company's debt far exceeds cash and cash equivalents. In fact, the debt is greater than the market capitalization of the company. Is the 4% dividend rate of the company safe again? Is the dividend yield even responsible? I have the impression that Larry Culp will do what he has to do. He would not have accepted the post if he did not think the company was recoverable. That said … if there is more suffering to be done, do you really need to be there?
Stocks are stronger today than profits. You know what, this bullish divergence that I explained to you in Market Recon this morning? This is not present here. You have a weaker relative strength last week, along with the "temporary dip" in the stock price. Listen, I do not know what will happen tomorrow. If you buy this name, I wish you good luck. However, I am not in the next hole. I'm tired of this stock. If I owned it, I would sell some of it.
(This column was originally published at 12:20 pm ET on Real Money, our premium site for active traders.Click here to get some great columns like this one from Stephen "Sarge" Guilfoyle, Jim Cramer and D & # Other experts throughout the market.)
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