Multinational conglomerate General Electric (GE) will release its third-quarter numbers before the bell on Friday, and it’s looking to break an ominous streak that dates back nearly two years. For seven consecutive quarters, GE stock has fallen on the day of the report.
But the selling doesn’t have anything to do with the headline numbers. In fact, GE has bested analysts’ expectations in eight of the last nine quarters, and it matched estimates in that ninth one.
Maybe a new CEO will be able to break the unlucky streak. The previous one, Jeffrey Immelt, left the company earlier this month and John Flannery took over at the helm. This is a big change, but the CEO swap wasn’t the only executive position being shuffled around recently.
Two weeks ago General Electric announced that its chief financial officer and two vice chairs would be leaving the company, and a few days later activist firm Trian Fund Management got one of its own elected to the board of directors. There are also some additional changes being made in the c-suite, which is typically only seen when there is something going on behind the scenes.
Whether or not that’s the case, I don’t think these adjustments are positive in the short term. And apparently Wall Street agrees as the shares hit a fresh 52-week low just last Thursday.
What We Need to See
In order to get its mojo back, GE needs a strong quarterly report. But even more importantly, it needs to provide upbeat guidance as well as a plan for the coming quarters and years. The details may be a bit slim on Friday, but we should get a more in-depth look at the company’s inner workings when its holds an investor meeting on November 13. Investors will be listening closely to hear the plans for each of GE’s divisions as well as how it is keeping up with innovation.
What I do expect to hear from management on Friday is a discussion of the dividend, which currently sits at a quarterly payout of $0.24 a share. The 4.1% yield is very attractive to investors, so any indication of a cut will hit the stock hard.
Technically, there’s no denying that GE is ugly now. And unfortunately there isn’t much on the chart to suggest that a bottom has been formed. The stock is hitting new lows on higher volume than I’d like to see, so while GE may be a great value investment at some point down the line, we simply aren’t there just yet.