General Electric stock rose 2.39 percent after Tuesday’s upgrade to “outperform” — and remains a compelling investment, Sanford Bernstein analyst Steven Winoker said on “Fast Money.”
“I think you’ve got to look at the amount of cash that the company is generating, and the board’s general policy is to drive 45 percent target payout ratio,” he said. “This company is really churning.”
Shares of the largest U.S. conglomerate closed at $16.72, near the middle of its 52-week range.
Winoker, who forecast a 10 percent dividend increase, estimated that GE was looking at $12 billion in revenue from its industrial business. When GE Capital’s performance is factored in, the stock looks strong.
“There’s a lot of pressure to send that dividend up to the parent, so I would also expect that to start next year,” he said. “Their ratios look better, their margins are strong and growing, and they’re in a very good position.”
Winoker said that for every $1.57 per share in estimated earnings GE is looking at for 2012, GE Capital accounts for about 65 cents.
“I think you should be looking it as an industrial company that happens to have a very, very large financial arm attached to it,” he said.
While important to note that GE is generating $100 billion out of its industrial business, Winoker said there was more to the story.
“You can’t ignore that it’s sitting on top of a $600 billion balance sheet on the bank side that just happens to doing better and getting a number of tailwinds after aggressively managed it through what was a horrendous couple of years,” he said.
Looking at options, trader Mike Khouw said GE’s were a little tighter.
“There’s room, probably, in options prices between now and Jan. 13 for dividends in the neighborhood of 85 to 90 cents, possibly, which would suggest that there’s room for probably a 1½, 2-cent dividend increase probably somewhere about halfway through next year,” he said.
GE is a 49 percent owner of NBC Universal, which is the parent company of CNBC.
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Trader disclosure: On Dec. 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Grasso owns AKS; Grasso owns AMR; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns BAC; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Najarian is long AAPL; Najarian is long C; Najarian is long JPM calls; Najarian is long WFC calls; Najarian is long INTC; Najarian is long; HOO; Najarian is long GE; Najarian is long COP; Najarian is long MC calls; Terranova is long EMC; Terranova is long SU; Terranova is long NCR; Terranova is long UPC; Terranova is long TRLG; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long AXP; Terranova is long IBM; Terranova is long HES; Terranova is long CAT; Terranova is long SWN; Terranova is long CNI; Terranova is long DECK; Terranova is long SBUX; Finerman owns SPY; Finerman has short calls AAPl; Finerman owns BAC; Finerman has short calls JPM; Finerman’s firm owns SPY; Finerman’s firm owns IWM; Finerman’s firm owns MDY; Finerman’s firm owns JPM; Finerman’s firm is long IBM and has short calls;
Steve Grasso
Stuart Frankel & Co. and its partners own CSCO
Stuart Frankel & Co. and its partners own CUBA
Stuart Frankel & Co. and its partners own GERN
Stuart Frankel & Co. and its partners own GM
Stuart Frankel & Co. and its partners own HPQ
Stuart Frankel & Co. and its partners own HSP
Stuart Frankel & Co. and its partners own HSPO
Stuart Frankel & Co. and its partners own JPM
Stuart Frankel & Co. and its partners own MET
Stuart Frankel & Co. and its partners own MSFT
Stuart Frankel & Co. and its partners own MU
Stuart Frankel & Co. and its partners own NYX
Stuart Frankel & Co. and its partners own PRST
Stuart Frankel & Co. and its partners own RDC
Stuart Frankel & Co. and its partners own UAL
Stuart Frankel & Co. and its partners own WFT
Stuart Frankel & Co. and its partners own XRX
Brian Kelly
Shelter Harbor Capital is long EURO
Shelter Harbor Capital is long IWM
Shelter Harbor Capital is long LNG
Shelter Harbor Capital is long PLPT
Shelter Harbor Capital is long CORN
Shelter Harbor Capital is long SOY
Shelter Harbor Capital is long AUSSIE $
Shelter Harbor Capital is long CANADIAN DOLLAR
Mike Khouw
Cantor Fitzgerald is a market maker in securities of AAPL
Cantor Fitzgerald is a market maker in securities of AKS
Cantor Fitzgerald is a market maker in securities of BAC
Cantor Fitzgerald is a market maker in securities of C
Cantor Fitzgerald is a market maker in securities of PNC
Cantor Fitzgerald is a market maker in securities of GS
Cantor Fitzgerald is a market maker in securities of JPM
Cantor Fitzgerald is a market maker in securities of WFC
Cantor Fitzgerald is a market maker in securities of GDX
Cantor Fitzgerald is a market maker in securities of MS
Cantor Fitzgerald is a market maker in securities of NFLX
Cantor Fitzgerald is a market maker in securities of GLD
Cantor Fitzgerald is a market maker in securities of XLU
Cantor Fitzgerald is a market maker in securities of TLT
Cantor Fitzgerald is a market maker in securities of XLF
Cantor Fitzgerald is a market maker in securities of SMH
Cantor Fitzgerald is a market maker in securities of INTC
Cantor Fitzgerald is a market maker in securities of CSCO
Cantor Fitzgerald is a market maker in securities of YHOO
Cantor Fitzgerald is a market maker in securities of IBM
Cantor Fitzgerald is a market maker in securities of CDR
Cantor Fitzgerald is a market maker in securities of AMZN
Cantor Fitzgerald is a market maker in securities of CMC
Cantor Fitzgerald is a market maker in securities of VZ
Cantor Fitzgerald is a market maker in securities of FIO
Cantor Fitzgerald is a market maker in securities of TOL
Cantor Fitzgerald is a market maker in securities of VMC
Cantor Fitzgerald is a market maker in securities of GE
Tim Freeman
Elevation LLC trades SPX options
Mike Walkley
No disclosures
Andy Hargreaves
Neither Andy, nor his family own shares of NFLX
Pacific Crest does not own > 1% shares of NFLX
Pacific Crest has no investment banking relationship with NFLX
Pacific Crest does make a market in the shares of NFLX
Steven Winoker
The following companies (GENERAL ELECTRIC GE) are or during the past twelve (12) months were clients of Bernstein, which provided non-investment banking securities related services and received compensation for such services GE / General Electric Co.
An affiliate of Bernstein received compensation for non-investment banking-securities related services from the following companies GE /General Electric Co.
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