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Wednesday, September 27, 2023

Is it Time to Take Your Profits From General Electric Co. (GE) Stock?

General Electric Co. (NYSE: GE) plans to separate the firm in the next quarters. The company’s energy business is growing just before the separation.

GE Healthcare (health projects) will be spun off in early 2023, followed by GE Vernova’s energy sector (GE Power and GE Renewable Energy) in early 2024. GE’s conventional energy solutions sector Power has been the most efficient in the firm for more than a year, while the other three segments (healthcare, aviation, and renewables) have been heavily impacted by supply chain disruption.

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As a result, GE Power’s current performance is especially crucial in light of the anticipated separation, as this business will be a key component of the future GE Vernova firm.

The development of renewable energy a few years ago lowered demand for new gas turbines, GE Power’s major product that has let the business earn service income at greater margins for 15 to 20 years. However, the situation has altered significantly, and demand for gas turbines began to rise modestly in 2020-2021, compared to 2018-2019.

GE Power’s management now expects modest single-digit sales and operating profit growth in 2022. Furthermore, General Electric Co. emphasizes the need for gas power for electricity generation, which may be a prerequisite for continuing demand.

If the division can maintain its current growth and profitability trajectory, the spin-off of GE Vernova will be more acceptable to investors, and the funds will be used for de-leveraging and restructuring.

Although the stock has performed remarkably well in recent months, the overall interest from investors has dropped noticeably. That has seen its trading volume slump by -51.27%, figures that rank poorly compared to the stock’s average volumes. This information is critical as it reflects the stocks’ float size, given that the market is exposed to 1.09 billion shares of the company.

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