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About a month ago, I talked about 4.00% being the magic number for General Electric (GE) in a number of ways. One of those ways was the annual dividend yield, because the stock’s fall was putting this number in play. Despite a huge market rally on Monday, GE shares actually declined, with the stock less than 75 cents from this key dividend level at the day’s low. Will this be the point at which investors see value from the name again?
Last September, the board declared a $ 0.24 quarterly dividend, at which point the forward yield was 3.95%. Unfortunately, this became a misleading number for GE because as the stock fell, more and more concerns built up about a dividend cut, so it was hard to use that payout rate to project a yield. Things reset in early December, when the current rate of $ 0.12 was declared, and the chart below shows how that yield has fared on a closing basis since.
(Data sourced from Yahoo Finance. Last data point on chart is for Monday, March 26th close of $ 12.90)
With shares hitting a low of $ 12.73 on Monday, the annual yield was up to 3.77%. As you can see below, even after GE shares bounced a little into Monday’s close, the current yield is well above even the longest dated US Treasury. Looking purely at income potential, GE represents a better play moving forward if you believe the payout remains at its current level.
The odd part about Monday’s decline for the stock was that the market soared, with the Dow up almost 670 points on the day. There wasn’t a major catalyst that sent GE shares lower, outside of the Wall Street Journal worrying a little about about risks left over from the company’s once massive lending business. Even names like Facebook (FB) and Tesla (TSLA) that have seen plenty of negative news recently managed to go positive by the close, something that didn’t happen with GE.
With the stock doing so poorly lately, and nobody sure of what will happen with the business moving forward, it might not be a surprise that JPMorgan slapped a street low $ 11 price target on the name a few weeks ago. This was based on the notion that normalized free cash flow per share looks to be well below the street consensus, and we’re not even at a trough. On the flip side, there are those arguing for plenty of upside for the beaten down name, with Melius Capital stating that a breakup likely undervalues the business by 25% or more than previously estimated.
The question for investors is does GE now become a value play? Well, that likely depends on what you think of potential earnings. If you think that the street’s projection of $ 1.06 in 2019 is fair or even low, then a forward P/E a little north of 12 with a dividend yield of 3.7% seems like a decent value at roughly half of the S&P 500’s current trailing P/E ratio. However, if you think the situation will get much worse and earnings per share could fall as low as say 80 cents next year (a bit worse than street low of $ 0.85), a P/E above 16 currently is a bit harder to stomach in a declining revenue/earnings scenario.
With GE shares hitting another low on Monday despite a tremendous market rally, I’m wondering today at what point investors will consider the name a value. Will it be the 4.00% annual yield that the stock is fast approaching? With a forward P/E in the low teens, the name is certainly not expensive if you think management can get the business going again, but again, a cheap stock can always get cheaper if the situation worsens. Do you see value in General Electric currently? I look forward to your comments below.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.
It’s the month of manufactured love. February 14th, Valentines’s Day is a chance to send those you love something special. But for Kim Kardashian, it’s also a chance to send her haters some love.
The social media celebrity and entrepreneur is sending a long list of celebs who don’t like her a gift–her new perfume. While it’s unclear whether her goal is to make amends or fan the flames of hate, it begs the question: Should we try to make up with our professional enemies?
In your career, your network is your net worth.
We all have former colleagues or bosses we dislike. But when it comes to our careers, it’s a small world. You never know when you’ll need a reference from someone you used to work with. Or perhaps the person now works at a company you’d love to work for. Burning bridges is the worst thing to do if you want to have a successful career. Having a strong network, filled with people you can tap when needed is an asset these days. Which means, you may just want to swallow your pride and make amends with those from your past that could be of value some day.
These 4 words go a long way: “Hey, can we chat?”
Reaching out on a social media platform like LinkedIn is a great start. Asking the person to connect will give you a sign as to whether he or she might even be open to a conversation. If your connection request is accepted, you can then send a note asking to catch up by phone or over coffee. When you speak, you should focus on keeping the conversation positive and trying to restore the trust and respect needed to move forward. A great thing to keep in mind is everyone has a professional strength. If you can identify what the person’s strength is, you can target the conversation around it. An example might be:
“I see you are working at XYZ in marketing now. You were always good at social media. What are some of the things you are working on now that excite you?”
By engaging in a conversation around what your colleague enjoys, it will put the person at ease and make the conversation flow better.
If you get called out, own it.
Lastly, if the person actually asks you why you are trying to re-establish a connection, be honest. It’s okay to say,
“I realize our relationship wasn’t as good as it could be in the past. I’m trying to improve how I network and support my colleagues. I’m sorry if my past interactions with you weren’t as positive as they could be. I’m trying to make amends and hope you will consider re-establishing our relationship.”
It’s harder for someone to dismiss you when you’re being accountable for your past actions. But, if they do, chalk it up as experience and move on. At least you tried…
I think every non-sociopath’s first instinct when seeing the title card of the video above—which lives up to its billing, as this is indeed a four-minute clip of a man equipped with a waterproof Glock who uses it to “fish” for lionfish—is one of dread. Oh no, you worry, accurately. Am I really about to watch someone brain scores of defenseless little fish with a goddamn handgun???
Watch out IBM Watson, Google has its own kickass ‘Show and Tell’ AI and it’s getting pretty damn good at depicting what it sees in photos – and now everyone can use it. Today, the tech giant announced it’s open-sourcing its automatic image-captioning algorithm as a model in TensorFlow for everyone to use. This means anyone can now train the algorithm to recognize various objects in photos with up to 93.9 percent accuracy – a significant improvement to the 89.6 percent that the company touted when the project initially launched back in 2014. Training ‘Show and Tell’ requires feeding it hundreds of thousands of human-captioned images that the machine then uses and re-uses when…
This story continues at The Next Web
Voice actors in the video game industry may go on strike if the union and the industry can’t negotiate new contracts.