General Electric reported quarterly earnings that topped Wall Street expectations — but its 17 percent drop in revenue was worse than analysts expected. Jack De Gan, CIO of Harbor Advisory, told investors how to approach the stock.
GE has been dragged down by deteriorating profit at its GE Capital arm, which has been hurt by heavy investments in commercial real estate and a weaker credit environment.
“There’s a lot of concern about how [GE’s] assets were being valued,” De Gan told CNBC. “GE Capital doesn’t have to mark almost all of their assets. Also, there’s concern relative to credit quality.”
The company generated $7.1 billion in cash from operations and its backlog of orders held steady at $169 billion.
“It’s positive that GE’s generating cash,” said De Gan. “If things get worse in the economy, it’s good to do the pre-funding and it’s going to be good to generate cash through runoff of the financial balance sheet.”
Overall, De Gan said he is bullish on the stock, long-term.
“We are long-term bulls on this stock, [but] we’re more cautious in the short and intermediate,” he said. “The stock has underperformed in the S&P in the last month or two, so there might be some catch-up due and we’ve seen that thus far this week.”
- General Electric Revenue Falls Short, Shares Slip
No immediate information was available for De Gan or his firm.
GE is the parent company of CNBC.
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