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General Electric Stock Price in Double-Digit Amid Restructuring Actions

General electric company

General Electric (NYSE: GE) stock price moved into a double-digit figure for the first time in the last three months. GE’s share price rally is backed by the trader’s confidence in restructuring actions and improving financial numbers.

The share price surged more than 11% in a single day after the earnings announcement. The significant share price growth clearly reflects investors’ confidence in GE’s strategy of moving their focus towards industrial and power businesses.

Its strategy of selling non-core assets has been enhancing cash position. The company has repaid billions of dollars of debt in the past couple of quarters.

GE General Electric Company daily Stock Chart

Strong Earnings Performance Lifted General Electric Stock Price

The company’s strategy of reducing the size of its business model along with focusing on high margin businesses is working. This is evident from the latest financial results.

Its industrial segment organic revenue jumped 7% from the previous year period. GE’s adjusted industrial profit margin grew +150 bps organically in the third quarter.

Moreover, the company’s adjusted Q3 earnings per share of $0.15 rose 36% year over year. Its total order backlog grew by 14% year over year to $386 billion at the end of the third quarter.

Transformation Actions are Working

The company has been aggressively working on a transformation plan. It sold the Wabtec stake for $1.6 billion in net cash; the total sale value is $6 billion. General Electric has also received $6.7 billion to date from Baker Hughes’ sale. Moreover, it completed almost $9 billion of total Industrial deleveraging actions.

GE has used asset sales proceeds for debt reduction; it has reduced external debt at GE Capital by $5 billion year to date.

CEO Larry Culp says, “2019 represents a progress year. It’s ‘still early’ in a multi-year transformation and 2020 and 2021 will be ‘meaningfully better.”

The company expects to generate fourth-quarter earnings per share in the range of $0.55-$0.65. It also anticipates the industrial segment organic revenue growth around the mid-single-digit. Overall, the restructuring actions are enhancing investors’ sentiments regarding General Electric stock price upside potential.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.