GENERAL ELECTRIC CO. $27 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $272.7 billion; Priceto- sales ratio: 1.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.ge.com) is selling most office buildings and real estate loans belonging to GE Capital, its financing subsidiary, to a group of investors for $26.5 billion.
The company will also hand out its remaining 85% stake in Synchrony Financial (New York symbol SYF), which provides credit card loans through retailers. GE will give its shareholders the chance to swap their stock for Synchrony shares.
It will take two years for GE to complete these transactions. After that, the financing business will supply just 10% of its earnings, down from 42% in 2014. The company plans to use the funds from these sales to buy back $50 billion worth of its shares.
Excluding unusual costs related to these moves, GE’s earnings fell 5.4% in the three months ended March 31, 2015, to $3.15 billion from $3.3 billion a year earlier. Per-share earnings declined 6.1%, to $0.31 from $0.33, on fewer shares outstanding. That’s mainly because the industrial division’s sales slipped 0.8%, to $24.4 billion from $24.5 billion, on slower demand for oil and gas extraction gear, jet engines and medical devices.
GE is a buy.
