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GE Aims to Record $2 Operating EPS in 2018, Shares Flat
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General Electric Company (GE - Free Report) recently renewed its forecast of strong earnings growth for the next two years, despite headwinds in the energy market. The company expects $2 per share in operating earnings for 2018 as it expects to overcome weakness in its oil and gas business. However, share price of the company remained relatively flat since the release of this news.
Notwithstanding headwinds in the energy market, General Electric outperformed the Zacks categorized Diversified Operations industry with an average year-to-date return of 5.5% compared with 4.7% of the latter. Also, in the last one year, the company’s revenues have risen considerably.
The company’s has predicted earnings of $1.60–$1.70 per share for 2017, while the Zacks Consensus Estimate is currently pegged at $1.69. For 2016, the company expects earnings per share in the range $1.48 to $1.52 and the Zacks Consensus Estimate of $1.49 lies well within the range.
Chief Executive Officer Jeff Immelt said that the company has decided to divest its $3 billion industrial solutions businesses in addition to its water business by mid 2017. The expected net proceeds from this transaction are $4 billion.
General Electric expects to produce over 500 production parts with 3-D printers by 2020, up from the earlier expected 15 parts in 2017. This will enable the company to cut manufacturing costs by at least $3 billion.
The acquisition of Baker Hughes Inc is expected to weigh on the company’s earnings by cutting 2 cents per share in 2017, but it is expected to add 4 cents in 2018.
For 2017, the company presently expects revenues of approximately $135 billion. It, however, expects to return between $19 billion and $21 billion to investors in 2017, compared with $30 billion in 2016.
General Electric is poised for long-term growth. In order to focus more on its core business activities, the company has started exiting the financial business and has increased its investments in key industrial businesses through restructuring, state-of-the-art technology, and R&D initiatives. Since Apr 2015 till the end of Sep 2016, GE Capital inked sale agreements worth approximately $193 billion in ending net investment, of which it has already completed deals worth $173 billion. By the end of 2016, the company expects to sell $200 million of GE Capital assets across the world. The transactions will realign the corporate strategy of the company to a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners. With these restructuring initiatives, General Electric expects operating earnings from the industrial business to aggregate over 90% of its total operating earnings by 2018, up from 58% in 2014.
We remain impressed with the focused growth initiatives of this Zacks Rank #3 (Hold) stock to improve its revenues. A couple of better-ranked stocks in the industry include Leucadia National Corporation and Macquarie Infrastructure Corporation both sporting a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Leucadia has a long-term earnings growth expectation of 18% and is currently trading at a forward P/E of 106.9x.
Macquarie has a positive average earnings surprise of 29.6% for the last four quarters, beating estimates twice.
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GE Aims to Record $2 Operating EPS in 2018, Shares Flat
General Electric Company (GE - Free Report) recently renewed its forecast of strong earnings growth for the next two years, despite headwinds in the energy market. The company expects $2 per share in operating earnings for 2018 as it expects to overcome weakness in its oil and gas business. However, share price of the company remained relatively flat since the release of this news.
Notwithstanding headwinds in the energy market, General Electric outperformed the Zacks categorized Diversified Operations industry with an average year-to-date return of 5.5% compared with 4.7% of the latter. Also, in the last one year, the company’s revenues have risen considerably.
The company’s has predicted earnings of $1.60–$1.70 per share for 2017, while the Zacks Consensus Estimate is currently pegged at $1.69. For 2016, the company expects earnings per share in the range $1.48 to $1.52 and the Zacks Consensus Estimate of $1.49 lies well within the range.
Chief Executive Officer Jeff Immelt said that the company has decided to divest its $3 billion industrial solutions businesses in addition to its water business by mid 2017. The expected net proceeds from this transaction are $4 billion.
General Electric expects to produce over 500 production parts with 3-D printers by 2020, up from the earlier expected 15 parts in 2017. This will enable the company to cut manufacturing costs by at least $3 billion.
The acquisition of Baker Hughes Inc is expected to weigh on the company’s earnings by cutting 2 cents per share in 2017, but it is expected to add 4 cents in 2018.
For 2017, the company presently expects revenues of approximately $135 billion. It, however, expects to return between $19 billion and $21 billion to investors in 2017, compared with $30 billion in 2016.
General Electric is poised for long-term growth. In order to focus more on its core business activities, the company has started exiting the financial business and has increased its investments in key industrial businesses through restructuring, state-of-the-art technology, and R&D initiatives. Since Apr 2015 till the end of Sep 2016, GE Capital inked sale agreements worth approximately $193 billion in ending net investment, of which it has already completed deals worth $173 billion. By the end of 2016, the company expects to sell $200 million of GE Capital assets across the world. The transactions will realign the corporate strategy of the company to a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners. With these restructuring initiatives, General Electric expects operating earnings from the industrial business to aggregate over 90% of its total operating earnings by 2018, up from 58% in 2014.
We remain impressed with the focused growth initiatives of this Zacks Rank #3 (Hold) stock to improve its revenues. A couple of better-ranked stocks in the industry include Leucadia National Corporation and Macquarie Infrastructure Corporation both sporting a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Leucadia has a long-term earnings growth expectation of 18% and is currently trading at a forward P/E of 106.9x.
Macquarie has a positive average earnings surprise of 29.6% for the last four quarters, beating estimates twice.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>