GE once said for a quarter of a century in a brand promise the company brings "good things to life." Now, investors are waiting for the company to bring its stock price back to life.
GE's (NYSE: GE) stock has risen over the past year from a low of $14.25 to $19.08 Monday, off a 52-week high of $21.65, but many investors are waiting for something more to happen -- much more. GE hasn't traded above $30 per share since early 2008, and when it crossed the $20 barrier early this year, it pulled back not long after a first quarter earnings report and has remained there.
Analysts and industry observers note GE's progress in the last couple of years, reshaping its business scope and breadth and cleaning up the financial arm of the company. The progress has been steady, and even GE chairman and CEO Jeff Immelt is talking in bullish tones once again.
"We like our portfolio of businesses," Immelt said last week, when GE slightly beat Wall Street's expectations in second quarter profits and sales. "We like the G.E. outlook."
But GE's stock price is not moving in the same accord as the positive sentiment. Investors ready to gain benefit beyond GE's 3.10 percent dividend yield need three things to happen.
Here's what it will take to get GE's stock moving again:
1) The moment GE's revenue, on the decline for two years, begins to grow again from year-over-year comparisons, the company's stock price will begin to pop. GE's revenue is getting arguably stronger since the company is relying more upon its industrial and infrastructure businesses these days than profits from its financial side of the business. The improvement is so notable it is even easy to argue investors are seeing a more true gauge of real business revenue for the first time in years from GE.
Still, Wall Street hasn't aggressively jumped back on board yet because it's still a decline from where it was before, and the increases have yet to show anything pleasantly surprising. They've just shown relieving progress.
Also, GE's backlog of business grows bigger and bigger, the company says, but that backlog seems to take its time getting into the quarterly numbers. Slightly beating revenue estimates won't get it done. Wall Street wants to see GE's revenue give out a big surprise.
2) Once the story of GE Capital is no longer part of the story except for what it contributes to the bottom line GE's stock will get moving again. By all accounts, GE Capital has fared better in the recovery period than many expected. GE Capital is profitable, and its apparent there's no "black box." It's also apparent though that there's still some cleaning up left to do, however. How long remains the pertinent question. Six months? One year? Two years? But once GE Capital drops from GE's story, other than what it can contribute to the bottom line, GE's stock will get moving again.
3) Find the "thing" that makes people take notice of GE, thinking the company is smart and sexy. Analysts understand what GE is doing with its global industrial and infrastructure businesses, but nobody beyond that seems to know or really care. People can relate to Apple's iPhone. They can relate to Google's Google+. They can relate to Ford's Fusion.
But ask most anybody these days what GE actually does and probably, you'll be hard pressed to find an answer. They know Boeing makes planes, but it's unlikely they know GE makes locomotives. Or wind turbines. The business is good, and getting better all the time, but at a moment when sexiness seems to matter for stocks again, GE is completely void in that regard. Once GE finds something sexy -- anything at all -- the company's stock will benefit.