Since January this year, as part of General Electric’s long-term strategy to improve its profit margins, the company has been reducing the operational size of its Capital financial segment. Investor sentiment has provided consent pushing the GE stock price up 8.94% year to date.

Bliston Asset Management’s Director of Global Equity Investments maintains the view GE’s strategy will serve to be the best passage as the company continues to recover from the 2008 financial crisis, which saw its stock plummet 57.23% in the wake of the crash.

“General Electric has in our view always been one of those Blue Chips that you need in your portfolio. Although in the run up to the crash in 2008, GE Capital accounted for approximately 45% of total company revenues, its exposure to the financial markets during the crash had a disastrous effect on its 2009 Fiscal performance, resulting is a stock landside to a low of $6.66 per share in March 2009.”

“As with most well managed companies the stock price has of course rebounded from its 2009 low, growing some 71% to a current price of $27. From what we understand and where our analysis pointing, we estimate that the stock still maintains value with a target price set at around the $31 per share by the end of 2015”.

The scale of GE Capital’s reduction in terms of total group contributions is astonishing when factoring in the other contributors to GE’s revenue flow. During Fiscal year 2014 GE Capital accounted for 28% of combined revenues, which then comes as a surprise as to why the company has targeted the sale of $400 billion worth of assets by the end of 2016.

“The scale of the downsizing initiative is more than smoothing over a few rough edges here and there, GE Capital has spun off large chunks of the Capital division in areas such as Real Estate and Commercial Lending. However the company has announced that it will maintain certain sub-segments that will continue to service its own industrial activities, which should bode well for the future.”

“As we look towards the consequences of the changes within GE, the evidence is pointing towards a period that will be driven by a renewed focus on industrials. Although the remaining of this year continues to reward investors, we expect 2016 to see a considerable upturn in revenue generation resulting in a year on year growth in earning per share,” concluded Bliston Asset Management’s Director of Global Equity Investments.