We have had quite a number of coverage on General Electric Company (NYSE:GE) in the last calendar year and practically all our options trade on the stock have been profitable. You can read about past coverage on General Electric here, here and here.
General Electric with its market capitalization of $247.94B is a diversified technology and financial services company. The products and services of the Company range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products. It serves customers in more than 100 countries.
General Electric Delivers Impressive Earnings Result
General Electric is back in my sights as the company reported another impressive (but mixed) quarter Q4 2014 of outperformance. As at 11:06 AM EST, shares of General Electric were up 1.61% to a $24.67 trading price. Without much ado, the market is happy with General Electric’s earnings release and the highlights of the earnings below justify the goodwill.
General Electric reported Q4 2014 EPS of $0.56 per share to beat the consensus analysts’ estimate of $0.55 per share.
The company reported a 4% year-over-year increase in revenue at $42 billion, but short of the consensus estimate of $42.15B
Organic Revenues increase by 9% year-over-year at $32B
Profits in the General Electric’s Industrial Segment were up 9% year-over-year
Revenue in Power and Water were up 22 %
Revenue in Transportation jumped 8%
The company reported a 6% annual decline in the profit from its Oil & Gas segment
The operating margin for the industrial segment at GE came in at 18.8% for the quarter. Operating margins for the quarter showed a YoY improvement of 50 basis points (bps). And Operating profit increased by 1%
The long and short of the story is that General Electric ended fiscal 2014 with impressive performance in its industrial earnings and margin growth.
Is General Electric a Bull or a Bear?
The chart above shows how the shares of General Electric have traded in the last one year. The stock chart looks so muddled that an attempt at technical analysis would appear pointless. However, I was able to deduce a double bottom pattern in the chart as shown by the two blue parabolic lines.
From a $26.20 peak in late September 2014, the stock dropped to a $23.41 low in mid-October. Then the stock rose to a 52-Week high of $27.53 in late December, only to fall to that $23.20 low last week. However, the stock is on the uptrend again as it currently sports a $24.79 trading price. Judging by the amount of investor goodwill that the stock enjoys from its Q4 2014 earnings, I strongly believe that the current bullish momentum would carry the stock back to the $26 resistance point.
In addition, the stock trades at a discount to its 50-day moving average of $25.29 and its 200-day moving average of $25.53. Hence, I posit that the stock has decent upside potential ahead as it closes the gap between its current trading price and its moving averages. More so, an RSI of 53.69 suggests that the bullish momentum is young and that the stock has more room to soar before it enters “Overbought” territory.
How to Trade GE Calls
I am optimistic on the prospects of General Electric and I recommend buying GE call options. I am particularly interested in the GE May 2015 26.000 call (GE150515C00026000) at an asking price of $0.31.
— Daily Option Alerts