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General Electric (GE) Q4 Earnings Top Estimates, Costs Rise Y/Y
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General Electric Company (GE - Free Report) reported fourth-quarter 2023 adjusted earnings of $1.03 per share, which beat the Zacks Consensus Estimate of adjusted earnings of 90 cents per share. However, the bottom line decreased 16.9% year over year.
Total segment revenues of $18,518 million beat the consensus estimate of $17,767 million. The top line increased 15.3% year over year.
Segmental Discussion
GE started reporting its revenues under two segments, effective from the first quarter of 2023, namely GE Aerospace and GE Vernova. The company completed the spin-off of GE HealthCare into an independent publicly traded company, retaining an approximately 19.9% stake in GE HealthCare’s common stock.
Aerospace revenues jumped 11.9% year over year to $8,520 million in the reported quarter, driven by robust demand for commercial engines and services. The Zacks Consensus Estimate for the quarter was $8,528 million. Organic revenues rose 12% year over year. Orders grew 9.7% year over year.
The GE Vernova has two subsegments, namely Renewable Energy and Power.
The Renewable Energy segment’s revenues totaled $4,213 million, up 23.4% year over year. The consensus estimate for the quarter was $3,705 million. Organically, the same increased 19%. Results benefited from strong momentum in Grid and Offshore Wind. Orders increased 0.8% year over year on a reported basis.
The Power segment’s revenues were up 15% year over year to $5,786 million. The consensus estimate for the quarter was $4,863 million. Organic revenues increased 12%. Strength in Gas Power and equipment revenue growth from both Aeroderivative and heavy-duty gas turbines aided the segment’s performance. Orders grew 5.3% on a reported basis year over year.
General Electric Company Price, Consensus and EPS Surprise
Margin Profile
In the quarter under review, General Electric’s cost of sales increased 15.7% year over year to $14,396 million. Selling, general and administrative expenses decreased 5.3% year over year to $2,524 million. Research and development expenses totaled $551 million, reflecting an increase of 6.4% year over year.
General Electric’s adjusted profit was $1,773 million, up 29.8% year over year. The margin in the quarter was 9.6%, up 110 basis points. On a reported basis, the Aerospace segment reported a profit of $1,598 million, up 11.4% year over year. The Renewable Energy sub-segment (part of GE Vernova) incurred a loss of $347 million compared with a loss of $454 million in the year-ago quarter. The Power sub-segment (part of GE Vernova) reported a profit of $759 million, up 9.7% year over year.
Balance Sheet and Cash Flow
Exiting 2023, General Electric had cash, cash equivalents and restricted cash of $16,967 million compared with $15,810 million at the end of December 2022. The company’s long-term borrowings were $19,711 million at the end of 2023 compared with $20,320 million at the end of December 2022.
Adjusted free cash flow in 2023 was $5,150 million compared with adjusted free cash flow of $3,059 million in the year-ago period.
In 2023, GE rewarded its shareholders with a preferred dividend payment of $295 million, up 2.1% year over year. General Electric repurchased 10.6 million shares for $1.1 billion during the year.
Outlook
For the first quarter of 2024, GE expects adjusted revenues to grow in the high-single-digits from the year-ago period. Adjusted earnings are predicted in the band of 60-65 cents per share. The Zacks Consensus Estimate for the same is 69 cents per share. Free cash flow is anticipated to be in line with net income growth.
On a separate note, General Electric announced that GE Aerospace and GE Vernova will launch as independent public companies in early April. In this regard, the company has provided a separate 2024 outlook for GE Aerospace and GE Vernova.
For 2024, GE Aerospace’s adjusted revenues are expected to grow in or more than low double digits from the year-ago period. Operating profit is anticipated to be $6.0-$6.5 billion and free cash flow is expected to be more than $5 billion.
GE Vernova’s revenue is expected to be $34-$35 billion for the year. Adjusted EBITDA margin is anticipated to be in mid-single digits (toward the higher end of the range) and free cash flow is expected to be $0.7-$1.1 billion for 2024.
Zacks Rank & Other Stocks to Consider
GE currently carries Zacks Rank #2 (Buy). Some other top-ranked companies are discussed below:
It has a trailing four-quarter average earnings surprise of 28.6%. The Zacks Consensus Estimate for GFF’s fiscal 2024 (ending September 2024) earnings increased 13% in the past 60 days. Shares of Griffon have jumped 51% in the past year.
ITT Inc. (ITT - Free Report) carries a Zacks Rank of 2. ITT delivered a trailing four-quarter average earnings surprise of 8%.
In the past 60 days, the Zacks Consensus Estimate for ITT’s 2023 earnings has increased 0.2%. The stock has risen 36.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days. Shares of Applied Industrial have jumped 43.4% in the past year.
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General Electric (GE) Q4 Earnings Top Estimates, Costs Rise Y/Y
General Electric Company (GE - Free Report) reported fourth-quarter 2023 adjusted earnings of $1.03 per share, which beat the Zacks Consensus Estimate of adjusted earnings of 90 cents per share. However, the bottom line decreased 16.9% year over year.
Total segment revenues of $18,518 million beat the consensus estimate of $17,767 million. The top line increased 15.3% year over year.
Segmental Discussion
GE started reporting its revenues under two segments, effective from the first quarter of 2023, namely GE Aerospace and GE Vernova. The company completed the spin-off of GE HealthCare into an independent publicly traded company, retaining an approximately 19.9% stake in GE HealthCare’s common stock.
Aerospace revenues jumped 11.9% year over year to $8,520 million in the reported quarter, driven by robust demand for commercial engines and services. The Zacks Consensus Estimate for the quarter was $8,528 million. Organic revenues rose 12% year over year. Orders grew 9.7% year over year.
The GE Vernova has two subsegments, namely Renewable Energy and Power.
The Renewable Energy segment’s revenues totaled $4,213 million, up 23.4% year over year. The consensus estimate for the quarter was $3,705 million. Organically, the same increased 19%. Results benefited from strong momentum in Grid and Offshore Wind. Orders increased 0.8% year over year on a reported basis.
The Power segment’s revenues were up 15% year over year to $5,786 million. The consensus estimate for the quarter was $4,863 million. Organic revenues increased 12%. Strength in Gas Power and equipment revenue growth from both Aeroderivative and heavy-duty gas turbines aided the segment’s performance. Orders grew 5.3% on a reported basis year over year.
General Electric Company Price, Consensus and EPS Surprise
Margin Profile
In the quarter under review, General Electric’s cost of sales increased 15.7% year over year to $14,396 million. Selling, general and administrative expenses decreased 5.3% year over year to $2,524 million. Research and development expenses totaled $551 million, reflecting an increase of 6.4% year over year.
General Electric’s adjusted profit was $1,773 million, up 29.8% year over year. The margin in the quarter was 9.6%, up 110 basis points. On a reported basis, the Aerospace segment reported a profit of $1,598 million, up 11.4% year over year. The Renewable Energy sub-segment (part of GE Vernova) incurred a loss of $347 million compared with a loss of $454 million in the year-ago quarter. The Power sub-segment (part of GE Vernova) reported a profit of $759 million, up 9.7% year over year.
Balance Sheet and Cash Flow
Exiting 2023, General Electric had cash, cash equivalents and restricted cash of $16,967 million compared with $15,810 million at the end of December 2022. The company’s long-term borrowings were $19,711 million at the end of 2023 compared with $20,320 million at the end of December 2022.
Adjusted free cash flow in 2023 was $5,150 million compared with adjusted free cash flow of $3,059 million in the year-ago period.
In 2023, GE rewarded its shareholders with a preferred dividend payment of $295 million, up 2.1% year over year. General Electric repurchased 10.6 million shares for $1.1 billion during the year.
Outlook
For the first quarter of 2024, GE expects adjusted revenues to grow in the high-single-digits from the year-ago period. Adjusted earnings are predicted in the band of 60-65 cents per share. The Zacks Consensus Estimate for the same is 69 cents per share. Free cash flow is anticipated to be in line with net income growth.
On a separate note, General Electric announced that GE Aerospace and GE Vernova will launch as independent public companies in early April. In this regard, the company has provided a separate 2024 outlook for GE Aerospace and GE Vernova.
For 2024, GE Aerospace’s adjusted revenues are expected to grow in or more than low double digits from the year-ago period. Operating profit is anticipated to be $6.0-$6.5 billion and free cash flow is expected to be more than $5 billion.
GE Vernova’s revenue is expected to be $34-$35 billion for the year. Adjusted EBITDA margin is anticipated to be in mid-single digits (toward the higher end of the range) and free cash flow is expected to be $0.7-$1.1 billion for 2024.
Zacks Rank & Other Stocks to Consider
GE currently carries Zacks Rank #2 (Buy). Some other top-ranked companies are discussed below:
Griffon Corp. (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy).
It has a trailing four-quarter average earnings surprise of 28.6%. The Zacks Consensus Estimate for GFF’s fiscal 2024 (ending September 2024) earnings increased 13% in the past 60 days. Shares of Griffon have jumped 51% in the past year.
ITT Inc. (ITT - Free Report) carries a Zacks Rank of 2. ITT delivered a trailing four-quarter average earnings surprise of 8%.
In the past 60 days, the Zacks Consensus Estimate for ITT’s 2023 earnings has increased 0.2%. The stock has risen 36.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days. Shares of Applied Industrial have jumped 43.4% in the past year.