General Electric (NYSE: GE) recently completed the spin-off of its power and renewables energy businesses, creating a new standalone energy company called GE Vernova. This move is part of the company’s restructuring plans that began in 2021, with GE Healthcare Technologies being spun off last year as well. The restructuring has been well received by investors, as GE stock has rallied over 75% in the last twelve months. GE Aerospace will now focus on the company’s aviation technology products.
Looking at the longer term performance of GE stock, it has seen strong gains of 110% from early 2021 to now, outperforming the S&P 500 which increased by about 40% over the same period. However, the stock’s returns have been inconsistent, with a 10% increase in 2021, a decrease of 11% in 2022, and a 95% increase in 2023. Comparatively, the S&P 500 had returns of 27% in 2021, -19% in 2022, and 24% in 2023, showing that GE underperformed in 2021.
Beating the S&P 500 consistently has been challenging for many stocks in recent years, including other heavyweights in the Industrials sector and megacap stars. However, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. The HQ Portfolio stocks have provided better returns with less risk compared to the benchmark index, showcasing a smoother performance.
With the current uncertain macroeconomic environment featuring high oil prices and elevated interest rates, there is speculation about how GE will perform in the next 12 months. The company’s stock is currently priced around $135, and any financial updates or guidance provided by the company for its Aerospace business is expected to impact its performance. General Electric’s Aerospace revenue has been on the rise, reaching $33.4 billion in 2023, and is expected to grow further to around $36 billion in 2024, showing a high single-digit year-over-year growth rate.
Despite the appropriate pricing of GE stock, it is valuable to compare the company with its peers to understand its performance metrics better. Investors can gain insights by looking at how General Electric’s peers fare on important metrics in the industry. Overall, GE’s restructuring efforts and focus on Aerospace and energy businesses post-spin-off will be crucial in determining the company’s future performance and investor sentiment.
