What’s Next For General Electric Stock After A 35% Rise This Year?

GE: General Electric logo
General Electric

General Electric (NYSE: GE) completed the spin-off of its power and renewables energy businesses on April 2. The spinoff company – GE Vernova (NYSE:GEV) – is now the new standalone energy company, while GE Aerospace (NYSE:GE) will be focused on the company’s aviation technology products. GE first announced its restructuring plans in 2021, and GE Healthcare Technologies was spun off last year. This restructuring has largely been considered positive for the company, and GE stock has rallied over 75% in the last twelve months.

Looking at a slightly longer term, GE stock has seen extremely strong gains of 110% from levels of $65 in early January 2021 to around $135 now, vs. an increase of about 40% for the S&P 500 over this roughly three-year period. However, the increase in GE stock has been far from consistent. Returns for the stock were 10% in 2021, -11% in 2022, and 95% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that GE underperformed the S&P in 2021.

In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for other heavyweights in the Industrials sector, including CAT, UNP, and UBER, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could GE face a similar situation as it did in 2021 and underperform the S&P over the next 12 months — or will it see a strong jump? We think it’s appropriately priced around its current level of $135. That said, the stock will likely react to any financial updates or guidance provided by the company for its Aerospace business.

General Electric’s Aerospace revenue rose from $22.3 billion in 2021 to $27.4 billion in 2022, and $33.4 billion in 2023. We expect the sales to be around $36 billion in 2024, reflecting a high single-digit y-o-y growth. The company expects the sales to rise in low double-digits. However, it is yet to be seen if the ongoing Boeing issue impacts GE’s business. For now, GE is seeing robust demand from aftermarket services amid strong travel demand and a shortage of new airplanes. Our General Electric Revenue dashboard has more details on total sales for the GE Aerospace and GE Vernova business.

While GE stock looks like it is appropriately priced, it is helpful to see how General Electric’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Returns Apr 2024
MTD [1]
YTD [1]
Total [2]
 GE Return -3% 34% 0%
 S&P 500 Return -1% 9% 133%
 Trefis Reinforced Value Portfolio -2% 4% 640%

[1] Returns as of 4/3/2024
[2] Cumulative total returns since the end of 2016

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