STRONG BUY -General Electric (GE)

General Electric (GE - Analyst Report) is in a rebuilding year as the economy recovers which should boost its industrial businesses and as it works its way through losses in its GE Capital unit. The company has an outstanding track record of beating estimates, having done so the last 4 quarters by an average of 29%.

It's rare that I get to review a company as big as GE, and one that's a Dow component, for the value pick as it's usually smaller cap stocks that dominate the Zacks Rank.

GE has its hands in nearly everything. It is a diversified finance, media and infrastructure company best known for building airplane engines, among other things.

GE Beat in the First Quarter by 31%

On Apr 16, GE reported first quarter results that beat on the Zacks Consensus by 5 cents. Earnings per share were 21 cents compared to the consensus of 16 cents. Despite the beat, this was 19% lower than EPS in the first quarter of 2009.

Revenue also fell 5% to $36.6 billion which reflected a shrinking of GE Capital. GE Capital, the finance arm, made $0.6 billion in the quarter but revenue fell 9% to $13.2 billion. The company said it was seeing stabilization in GE Capital with losses, delinquencies and nonearning assets falling in the quarter.

Industrial sales showed some resilience but were still down 2% to $23.5 billion compared to a year ago.

"We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets," said Jeff Immelt, GE Chairman and CEO.

"Total company backlog of equipment and services held steady from the prior quarter at $174 billion. Our Healthcare and Oil & Gas businesses experienced solid orders growth and our equipment and services backlog remains strong," he added.

Bigger Dividend Coming Back?

Investors have been waiting for news on GE's dividend which was cut during the crisis. Many investors counted on GE's once hefty dividend for added income.

The company alluded to dividend increases in April when it said it expected to grow earnings and dividends in 2011 and beyond. Investors will have to stay tuned in 6 months time to see if the company truly does raise its dividend in the new year.

Zacks Consensus Estimates Rise

Second quarter estimates have been holding at 26 cents over the last 60 days. That is up 2 cents in that time period. For 2010, the Zacks Consensus jumped 6 cents to $1.07 in the last 2 months.

While analysts see EPS growth actually falling 7.4% in 2010 compared to 2009, they see growth returning in 2011.

1 estimate has moved higher for 2011 in the last 30 days pushing the Zacks Consensus up to $1.31 form $1.29 per share during that time.

Earnings are expected to grow by 22% in 2011.

Is GE a Value Stock?

GE's stock has declined in recent sessions with this May sell-off and that has pushed the stock into value territory. It is now trading with a forward P/E of 14.9, just under the 15 cut off for a value stock.

Its price-to-book is in value territory at 1.4, which is also the industry average.

The current dividend, while smaller than before, is still above the industry average. It is yielding 2.5% compared to the industry average of 1.7%.