Lights Out: Has General Electric Co. (GE) Hit Bottom?

Once a bellwether of the New York Stock Exchange and still one of America's most well-known and prosperous companies, General Electric Co. (NYSE: GE) is causing nothing but pain for investors.

While the Standard & Poor's 500 index is up 12 percent this year, GE stock is moving the other direction, down 20.7 percent since Jan. 1.

But there's a glimmer of hope for GE backers. There's a new CEO, with longtime GE executive John Flannery replacing Jeff Immelt in June. Flannery, who was president and CEO of GE Healthcare, will also become chairman of the board on Jan. 1.

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And GE had a moderate run-up in share price in September, capped off by its $2.6 billion sale of its industrial solutions unit to Swiss-based ABB (the GE unit primarily builds components for power grids.)

"GE has likely bottomed, with all of the bad news now priced into the share price," says Michael Kramer, a portfolio manager at Interactive Brokers Asset Management, an online investing company with offices in Boston and London.

General Electric is a multinational conglomerate co-founded by Thomas Edison in 1892. It is currently best-known in the U.S. for its lighting, appliance and electronics businesses, but it also has lucrative financial service, real estate, health care and energy divisions. Under Immelt, GE worked over the last decade to divest itself of other well-known businesses, such as NBC, NBC Universal and numerous broadcasting holdings, and Universal Studios. The company plans to complete a move next year from from its longtime headquarters in Fairfield, Connecticut, to Boston.

For investors, the big event most are waiting for is an update to guidance for 2018, which is expected sometime in November, Kramer says. "If those numbers are better than expected, shares of GE could rise significantly from current levels, back toward the $30 level."

Consensus one-year estimates for GE stock aren't that bullish -- a group of 15 industrial industry analysts peg the company's 12-month share price at $28. Plus, other say GE's track record of late is nothing to celebrate, but good times are just around the corner.

"GE's stock has underperformed the S&P 500 index for the last one-, three-, five-, 10- and 15-year periods," says John D. Frankola, a financial advisor at Vista Investment Management in Pittsburgh. "Its management and board has been criticized for many of the strategic decisions made over the past 10 years, including exiting the financial service business near the bottom and buying into the energy sector near the top.

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"Furthermore, recent cash flow weakness has raised concerns regarding its dividend," Frankola adds. "Our recent investment in GE reflects optimism that [Flannery] will be able to implement a turnaround in performance. We expect to see significant cost-cutting, which should improve cash flow and profitability, and we regard most of GE's businesses as attractive and strongly positioned in their respective markets."

In that regard, all eyes are on Flannery, who's only been on the job for 100 days. Some even hold Flannery accountable for a summer swoon for GE stock.

"GE has been under pressure as of late as concerns over the company's prospects for growth and uncertainty over [Flannery's] plans have taken the stock price nearly 25 percent off of its 52-week high of $32.38," says Brent M. Wilsey, owner of San Diego-based Wilsey Asset Management.

Even with the substantial decline, GE isn't trading at a great value right now, he adds. "The current price-earnings ratio of 27.74 is above the industry average of 20.57," Wilsey says. "Even if you look forward to a December 2018 estimated GAAP EPS of $1.61, you get a forward P/E multiple of 15.1. I like to buy companies when they're trading at a forward multiple of 10 to 12 and sell them when they hit a forward P/E multiple of 16.5."

Others agree, calling for yet another slide in GE stock.

"We believe this defines sentiment on the stock, which is somewhere between somewhat negative, and what we would characterize as 'chicken bullish,' with a common theme [that things] are not that bad," says Stephen Tusa, Wall Street analyst at JP Morgan, in a recent research note.

Tusa, who calls for a GE price target of $22 per share, said early in September that GE was facing stiff headwinds in the form of angst over liquidity and growth. While $22 is his target number, Tusa says that GE could slide to less than $20 per share before he would recommend buying the stock.

It's Tusa's opinion that General Electric is "tight on cash," but does note that GE's 4 percent dividend is protected "for now" and says GE's share buyback program is "fungible."

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Tusa also calls his decidedly bearish outlook on GE stock "an adjustment to reality, not cyclical," as structural weakness in GE's power business, a less-than-expected bounce in oil and gas and transportation and a different approach to reporting numbers provides downside risk to earnings expectations," he stats in a research note to JP Morgan clients.

So let's call the jury "out" on GE stock for the rest of the year. Unless you believe that change, in the form of new corporate leadership, is reason enough to buy, it might be wiser to layoff on GE until Flannery has more time to prove himself -- and more time for GE to get its act together.

Brian O'Connell is a contributing financial writer for U.S. News & World Report. A former Wall Street bond trader and the author of two best-selling books; "The 401k Millionaire" and "CNBC's Creating Wealth", he has 20 years experience covering business news and trends, particularly in the financial, technology, political and career management sectors. His byline has appeared in dozens of top-tier national business publications, including CBS News, Bloomberg, Time, MSN Money, The Wall Street Journal, CNBC, TheStreet.com, Yahoo Finance, CBS Marketwatch, and many more. Visit his web site at: https://brianoco.contently.com/. Or, visit this Amazon.com link for a list/review of some of his book titles. Reach out to him on LinkedIn.