General Electric Company (NYSE:GE) spent the second consecutive session in the same range of $27.35-85, ending the day with a mild loss of 0.97%. It has been consolidating in a narrow range for the last 3 sessions, following a super rally in the last two days of the previous week. The news of the company selling its entire financial arm and returning to its core manufacturing business was received very enthusiastically by the market, leading to that huge rise in just 2 sessions. The company will focus on 7 segments including Aviation, Transportation, Healthcare, Energy Management, Oild & Gas, Power & Water and Lighting.
The most profitable segment for the company is Aviation and Power & Water provides the second highest return on assets. In Transportation, the controls a good 70% share of the locomotive market in US. The lowest profit margin generator would be the Oil & Gas segment at 13.8% and also the lowest return on assets of 14.55%. The investors may worry a bit about the focus and continued high investment in this low-return segment instead of the more lucrative others.
Now the market is waiting for the company to announce the first quarter results on Friday along with the guidance at the ensuing conference call. Anything below 30 cents a share in profit will shock the market as it is already discounting a drop of 10% from the same quarter last year. The revenue is expected to remain flat on the same basis, at $32.2 billion.
Technically, the stock has broken out of a year long range, well defined by a downward channel, with a Breakaway Gap. If the gap remains unfilled and the upper boundary of the channel manages to provide adequate support near $26.50-$27.00, then much more upside to $30 or even higher can be expected.
