General Electric’s Lobbying Power: A Deep Dive into Q1 Results

The Influence of General Electric’s Lobby in Congress

General Electric (GE) wields significant influence in Congress, evident through its substantial lobbying expenditures, totaling over $4.7 million in 2024 alone. Notably, the majority of GE’s campaign donations to the Senate were directed towards Democrats, with President Joe Biden emerging as the top recipient of campaign contributions from GE owners and employees. This powerful lobby, coupled with campaign donations, played a pivotal role in Congress’s recent decision to allocate funding for ongoing conflicts in Israel and Ukraine.

Aerospace Spin-off and Q1 Earnings

On April 2, General Electric completed the spin-off of its power generation company, GE Vernona (GEV), leaving the aerospace business as the sole remaining entity of the once-vast industrial conglomerate. Following this significant corporate restructuring, GE Aerospace (GE) released its first quarterly report post-spinoff, albeit including Vernona’s numbers for the last time. Despite the complexity introduced by the spinoff, Q1 earnings demonstrated continued momentum for GE, although analysts grappled with accurately assessing the impact of the restructuring on financial performance.

Strong Momentum Post-Spinoff

Amidst the spinoff, GE Aerospace’s commercial and defense segments experienced robust demand, propelling total orders to a staggering 34% year-over-year increase, reaching $11.0 billion. Operating profit also saw a notable uptick, rising by 24% to $1.5 billion. This strong performance underscores the resilience and agility of GE in navigating the changing landscape of the aerospace industry.

Segmented Operations and Growth Drivers

Following the spinoff, GE now organizes its operations into two distinct segments: Commercial Engines & Services (CES) and Defense & Propulsion Technologies (DPT). CES, boasting revenues of $6.1 billion and experiencing a 16% year-over-year growth, continues to thrive due to strong demand for both services and equipment. With commercial airlines increasingly investing in maintenance and repair services, coupled with Boeing’s challenges in the production of its 737 MAX jet, CES anticipates sustained growth in the foreseeable future.

Expanding Defense Market Opportunities

On the defense front, DPT witnessed a surge in orders, reaching $3.0 billion, alongside a 26% increase in operating profit, amounting to $300 million. Given the geopolitical volatility worldwide, demand for defense products remains robust, ensuring a healthy outlook for GE’s military offerings, including engines, propellers, flight control, and power generation components.

Upbeat FY24 Guidance

Reflecting the positive outlook for both CES and DPT, GE revised its FY24 guidance, anticipating adjusted revenue growth in the low-double-digits and operating income ranging from $6.2 billion to $6.6 billion. Despite the spinoff, the underlying demand for aerospace remains resilient, fueled by the resurgence of the travel industry and increased defense spending by governments worldwide.

GE Technical Analysis

Price Action: GE’s stock appears to have been on an uptrend, with the latest closing price at $162.43. The stock is currently trading above both the 50-day and 200-day moving averages, indicating a bullish sentiment. The recent price action shows some retracement from higher levels.

Volume: The volume for the last session was 977,817, which does not indicate significant deviation from the norm, suggesting that the current price movement is not accompanied by unusually high trading volume.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI): The 14-day RSI is at 58.31, which is neither overbought nor oversold. This indicates that there is neither excessive bullishness nor bearishness among investors at the current level.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV line is on an uptrend and is high, suggesting that volume on up days has been greater than volume on down days. This typically confirms the ongoing uptrend in price.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: The Stochastic RSI is not in the overbought or oversold area, with a value of 0.598. This indicates that the price has momentum and there may be some more room for the price to move before becoming overbought or oversold.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX): The ADX is at 38.90, which indicates a strong trend. An ADX above 25 often suggests that the current trend is strong and likely to continue.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator is negative at -2,654,035, which may suggest that there is some selling pressure or distribution happening. This could be a sign of caution, as it may precede a downturn in the price.

Interpretation: The indicators suggest that GE is currently in a strong uptrend, supported by volume. The RSI and Stochastic RSI indicate that the stock is not in overbought territory, which could mean that the uptrend may continue. However, the negative Chaikin Oscillator is a note of caution and warrants monitoring for potential selling pressure.

In conclusion, General Electric’s powerful lobbying efforts, coupled with its successful aerospace spinoff and strong Q1 performance, underscore the company’s ability to adapt and thrive amidst changing market dynamics. With a focused approach towards innovation and customer satisfaction, GE continues to solidify its position as a key player in the aerospace industry, poised for sustained growth in the years to come.