General Electric delivers a stock shock


The latest news from General Electric (GE) is a disaster on so many fronts in my opinion.

The industrial bellwether unveiled a restructuring plan that cuts the annual dividend by $4 billion, according to the Wall Street Journal, and aims to streamline the company’s operations

 

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In my view, the dividend cut wasn’t the worst part; it was that 2018 guidance that sank the stock.

 

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Source: Mott Capital

 

The dividend cut, as we discussed, was widely expected, but the guidance for 2018, was even worse than what the GE bears and even I had feared.

Tough Guidance

Full-year earnings guidance was cut to $1.00 from to $1.07 per share.

In my view, that makes the current stock price of around $20 just too expensive.

 

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Source: Bloomberg

 

Given that there’s nearly no earnings growth on the horizon, this is a position I can no longer hold on to.

Photo Credit: gerlos via Flickr Creative Commons

 

 

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Mott Capital Management, LLC
Mott Capital Management, LLC
Mott Capital Management uses a long-term thematic growth approach to investing in equities. We search for investments that both reflect and help to shape generational and demographic shifts. Mott uses a philosophy of buying these companies for a 3- to 5-year time horizon, with the belief that a long-term holding period gives themes and our chosen companies a chance to fully develop. In our view, the long time horizon also serves to mitigate the risk associated with the short-term impact of market volatility.