General Electric’s (GE) stock has been on a roller coaster ride over the past few months. The stock hit a 52-week low of $6.66 in early December. JPMorgan analyst Stephen Tusa suggested GE had bottomed and the stock soared. GE is up more than 50% compared to its 52-week low. The ride has been accompanied by stories of asset sales and CEO Larry Culp turning the business around. It divested part of its stake in Baker Hughes (BHGE). GE also merged Transportation with Wabtec (WAB) and retained a sizeable stake in the merged entity. An IPO of Healthcare could be next.
It all begs the question, “So what?” Asset sales will cut the company’s debt load, but they also will reduce future earnings and cash flow. It’s difficult to understand GE’s recurring operating income and cash flow because it keeps divesting assets and engaging in some new strategy. Fitch recently revised GE’s credit to Negative from Stable …
Though the incessant press releases and asset sales may have helped the stare price, they may not have improved GE’s credit profile. Read more:
