General Electric is Thursday's IBD Stock Of The Day as it gets ready to close the books on its era as an industrial conglomerate. But rather than facing a hard landing, it appears ready to fly off into a beautiful sunset. GE stock has climbed close to an early entry point on the strength of better-than-expected third-quarter earnings and its improved full-year outlook.
While reporting Q3 results on Oct. 24, GE said it's on track to spin off its power and renewable energy unit at the start of the second quarter of 2024. Following the spinoff, shares of GE Vernova will be distributed to current holders of GE common stock, which will become GE Aerospace.
On Jan. 4, GE completed the spinoff of GE HealthCare Technologies. Since then, GE stock has been among the top performers in the S&P 500, with a 72% gain through Wednesday.
Aviation, Renewables On Upswing
In Q3, GE Aerospace saw orders grow 34% and revenue 25%, led by its commercial engines and services business amid the ongoing rebound in travel. Defense revenue rose 8%.
GE raised the full-year outlook for its aerospace division to about $6 billion in operating profit, up from prior guidance of $5.6 billion to $5.9 billion. Organic revenue growth is seen topping 20%.
In its Vernova division, GE said its two largest renewables businesses, onshore wind and Grid Solutions, were both profitable in Q3. Meanwhile its Power unit performed well, thanks to an increase in sales of heavy duty gas turbines. Offshore wind "remains difficult," GE CEO Larry Culp said on the Oct. 24 earnings call, with expected losses of roughly $1 billion this year and next.
Still, Culp said in the earnings statement, the positive performance of the rest of the division makes him "highly confident in GE Vernova's spinoff next year."
Overall revenue growth has accelerated for several quarters.
GE Stock
GE stock dipped 0.4% to 113.44 in Thursday afternoon stock market action, as the S&P 500 took a pause after eight straight gains.
On Monday, GE stock reclaimed its 50-day moving average and has continued moving higher. Shares are up more than 4% this week.
A move past the Oct. 24 intraday high of 114.89 would offer an early entry opportunity, thanks to an upside break of the downtrend in place since Sept. 21.
GE stock has an official 117.96 flat-base buy point, according to MarketSmith. A weekly chart shows GE's relative strength line at a five-year high. The RS line is the blue line in IBD charts that tracks a stock's progress vs. the S&P 500.
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