International Business Machines Corp. (IBM), McDonald’s Corporation (MCD), General Electric Company (GE): 3 Dow Stocks Disappoint

Lights out ?

The Dow’s oldest member also reported results recently. General Electric Company (NYSE:GE) said that earnings grew by 16% in spite of flat-revenue gains and it lowered full-year projections into the “single digits.” Previously, the company was expecting at least low double-digit growth for the full year.

The company was hurt by an “unexpected 17% drop in sales in Europe,” blaming it on the austerity measures taking place in the euro zone. Haven’t they been keeping an eye on the problems there?

The bad results in Europe were somewhat offset by improvement at GE Capital and cost-cutting measures across the enterprise.

The lowered guidance drove the stock down by 4% on the day of the announcement, cutting into a chunk of the 17% run-up in share price over the past year.

General Electric Company (NYSE:GE) did have a bright spot during the quarter. As a sign of improving future profitability perhaps there was a jump in order backlog to $216 billion.

The company didn’t appear to offer any solutions to overcome the reduced guidance going forward. Unless it offers more clues, the stock may not resume its upward march and shareholders will look elsewhere.

Conclusion

Three long-time members of the Dow posted “disappointing” quarterly results.

One, International Business Machines Corp. (NYSE:IBM), says it needs to execute better but not change overall strategy. That may be a good approach for such a huge company, one with a valuation of over $200 billion.

Another, McDonald’s Corporation (NYSE:MCD), says it is in the midst of reversing course and will emphasize lower-priced product offerings. Since it is a smaller company than International Business Machines Corp. (NYSE:IBM), with a market cap more than 50% lower, it’s more flexible in what it can do and has a good chance of being successful.

A third, General Electric Company (NYSE:GE) appears to be willing to let things slide and hope for the best. They keep saying things will get better in the future. That may not be the best approach.

Like the 1977 song by Meatloaf, two out of three ain’t bad.

The article Three Dow Stocks Disappoint originally appeared on Fool.com and is written by Mark Morelli.

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