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General Electric (GE) to Post Q3 Earnings: What Lies Ahead?
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General Electric Company (GE - Free Report) is slated to report third-quarter 2018 results on Oct 30, before the market opens.
The company pulled off an average positive earnings surprise of 1.66% over the preceding four quarters. Notably, General Electric’s second-quarter 2018 adjusted earnings of 19 cents per share outpaced the Zacks Consensus Estimate by a penny.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
General Electric rolled out a business portfolio-restructuring program this June, in a bid to become a high-tech industrial company. Supported by this, the company intends to become more competent by strengthening its Aviation, Power and Renewable Energy businesses. General Electric expects that efforts undertaken to reduce the cost base, improve product and service quality, and augment the value of installed base will boost its competency, going forward.
Higher revenues generated from the Aviation, Oil & Gas, as well as Healthcare segments aided General Electric’s aggregate top-line performance in the last reported quarter.
The company anticipates that favorable market conditions and new order receipts will continue to drive the Aviation segment’s near-term revenues. Upswing in Air Freight volumes, upbeat Load factors and growth in worldwide revenue passenger kilometers will likely strengthen the segment’s performance in the quarters ahead. The Zacks Consensus Estimate for third-quarter 2018 revenues of GE Aviation is currently pegged at $7,632 million, higher than $7,519 million recorded in the previous quarter and $6,816 million in the year-ago quarter.
General Electric predicts that its Renewable Energy segment’s top line will rebound in second-half 2018. Improving market conditions and rising demand for onshore wind services will likely bolster the segment’s near-term revenues. However, pricing remains a cause of concern for the segment. The Zacks Consensus Estimate for third-quarter 2018 revenues of GE Renewable Energy is currently pinned at $3,182 million, higher than $1,653 million recorded in the last quarter and $2,905 million in the year-earlier quarter.
Stellar revenues generated from developed and emerging end-markets will likely drive the top-line growth trajectory of General Electric’s Healthcare segment. The Zacks Consensus Estimate for third-quarter revenue of GE Healthcare is currently pegged at $4,732 million, slightly higher than $4,724 million recorded year-ago quarter. However, the estimate falls short of the $4,978 million recorded in the prior quarter. Going forward, the company intends to separate its Healthcare business segment into a stand-alone company.
Growth in locomotive-order receipts might aid in rebounding revenues of the company’s Transportation segment. However, the Zacks Consensus Estimate for the segment’s third-quarter revenues is pinned at $935 million, lower than $942 million recorded in the prior quarter and $1,074 million in the comparable period last year. General Electric has planned to soon divest its Transportation business arm to Wabtec Corporation.
Benefits secured from Baker Hughes — a GE company — will likely continue to strengthen the Oil & Gas segment’s top-line performance. Notably, the Zacks Consensus Estimate for the segment’s third-quarter revenues is currently pegged at $5,756 million, higher than $5,554 million recorded in the last quarter and $5,365 million in the prior-year quarter. The company intends to exit the oil and gas businesses by disposing its 62.5% interest stake in Baker Hughes.
We notice that the Zacks Consensus Estimate for the General Electric’s Capital business segment’s third-quarter revenues is $2,183 million, lower than $2,429 million recorded in the previous quarter. General Electric is making moves to reduce exposure of its Capital business.
The Zacks Consensus Estimate for the company’s Lighting business segment’s third-quarter revenues is pinned at $431 million, lower than $2,905 million recorded in the year-earlier quarter. The top-line performance of the segment dipped in the second quarter on a year-over-year basis.
Weakening power business remains a key cause of concern for General Electric. The company anticipates that high volatility, unfavorable market conditions and dismal orders may drag down the segment’s top-line performances in the quarter to be reported. These setbacks are straining General Electric’s working capital and cash flow. However, the company is trying to battle these issues through operational improvements. Moreover, new aero derivatives and gas turbine orders might aid in rebounding the segment’s performance in second-half 2018. Nevertheless, the Zacks Consensus Estimate for the segment’s third-quarter revenue is $5,969 million, lower than $7,579 million recorded in the prior quarter and $8,679 million in the comparable period last year.
General Electric perceives that cash pressure rising from its troubled Power segment will be muted by strength in the Healthcare and Aviation businesses, as well as lower corporate costs. The company intends to enhance its profitability on the back of higher revenues and diligent cost-cutting moves.
Notably, General Electric believes its portfolio-restructuring plan will help reduce structural cost, moving ahead. The company has implemented an Enterprise Resource Planning system to efficiently view its existing cost positions and deal with business project issues. In addition to these, we believe capital expenditures incurred to propel growth across all business segments will boost the company’s revenues and profitability in the quarters ahead.
Earnings Whispers
Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 (Hold) for a likely earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
That is not the case here as we will see below.
Earnings ESP: General Electrichas an Earnings ESP of -4.76%. This is because the Zacks Consensus Estimate for the stock is currently pinned at 21 cents, a penny higher than the Most Accurate Estimate.
Zacks Rank: General Electric’s Zacks Rank of 4, when combined with a negative Earnings ESP, makes surprise predictions inconclusive.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are two stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:
ITT Inc. (ITT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +1.41%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
General Electric (GE) to Post Q3 Earnings: What Lies Ahead?
General Electric Company (GE - Free Report) is slated to report third-quarter 2018 results on Oct 30, before the market opens.
The company pulled off an average positive earnings surprise of 1.66% over the preceding four quarters. Notably, General Electric’s second-quarter 2018 adjusted earnings of 19 cents per share outpaced the Zacks Consensus Estimate by a penny.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
General Electric rolled out a business portfolio-restructuring program this June, in a bid to become a high-tech industrial company. Supported by this, the company intends to become more competent by strengthening its Aviation, Power and Renewable Energy businesses. General Electric expects that efforts undertaken to reduce the cost base, improve product and service quality, and augment the value of installed base will boost its competency, going forward.
Higher revenues generated from the Aviation, Oil & Gas, as well as Healthcare segments aided General Electric’s aggregate top-line performance in the last reported quarter.
The company anticipates that favorable market conditions and new order receipts will continue to drive the Aviation segment’s near-term revenues. Upswing in Air Freight volumes, upbeat Load factors and growth in worldwide revenue passenger kilometers will likely strengthen the segment’s performance in the quarters ahead. The Zacks Consensus Estimate for third-quarter 2018 revenues of GE Aviation is currently pegged at $7,632 million, higher than $7,519 million recorded in the previous quarter and $6,816 million in the year-ago quarter.
General Electric predicts that its Renewable Energy segment’s top line will rebound in second-half 2018. Improving market conditions and rising demand for onshore wind services will likely bolster the segment’s near-term revenues. However, pricing remains a cause of concern for the segment. The Zacks Consensus Estimate for third-quarter 2018 revenues of GE Renewable Energy is currently pinned at $3,182 million, higher than $1,653 million recorded in the last quarter and $2,905 million in the year-earlier quarter.
Stellar revenues generated from developed and emerging end-markets will likely drive the top-line growth trajectory of General Electric’s Healthcare segment. The Zacks Consensus Estimate for third-quarter revenue of GE Healthcare is currently pegged at $4,732 million, slightly higher than $4,724 million recorded year-ago quarter. However, the estimate falls short of the $4,978 million recorded in the prior quarter. Going forward, the company intends to separate its Healthcare business segment into a stand-alone company.
Growth in locomotive-order receipts might aid in rebounding revenues of the company’s Transportation segment. However, the Zacks Consensus Estimate for the segment’s third-quarter revenues is pinned at $935 million, lower than $942 million recorded in the prior quarter and $1,074 million in the comparable period last year. General Electric has planned to soon divest its Transportation business arm to Wabtec Corporation.
Benefits secured from Baker Hughes — a GE company — will likely continue to strengthen the Oil & Gas segment’s top-line performance. Notably, the Zacks Consensus Estimate for the segment’s third-quarter revenues is currently pegged at $5,756 million, higher than $5,554 million recorded in the last quarter and $5,365 million in the prior-year quarter. The company intends to exit the oil and gas businesses by disposing its 62.5% interest stake in Baker Hughes.
We notice that the Zacks Consensus Estimate for the General Electric’s Capital business segment’s third-quarter revenues is $2,183 million, lower than $2,429 million recorded in the previous quarter. General Electric is making moves to reduce exposure of its Capital business.
The Zacks Consensus Estimate for the company’s Lighting business segment’s third-quarter revenues is pinned at $431 million, lower than $2,905 million recorded in the year-earlier quarter. The top-line performance of the segment dipped in the second quarter on a year-over-year basis.
Weakening power business remains a key cause of concern for General Electric. The company anticipates that high volatility, unfavorable market conditions and dismal orders may drag down the segment’s top-line performances in the quarter to be reported. These setbacks are straining General Electric’s working capital and cash flow. However, the company is trying to battle these issues through operational improvements. Moreover, new aero derivatives and gas turbine orders might aid in rebounding the segment’s performance in second-half 2018. Nevertheless, the Zacks Consensus Estimate for the segment’s third-quarter revenue is $5,969 million, lower than $7,579 million recorded in the prior quarter and $8,679 million in the comparable period last year.
General Electric perceives that cash pressure rising from its troubled Power segment will be muted by strength in the Healthcare and Aviation businesses, as well as lower corporate costs. The company intends to enhance its profitability on the back of higher revenues and diligent cost-cutting moves.
Notably, General Electric believes its portfolio-restructuring plan will help reduce structural cost, moving ahead. The company has implemented an Enterprise Resource Planning system to efficiently view its existing cost positions and deal with business project issues. In addition to these, we believe capital expenditures incurred to propel growth across all business segments will boost the company’s revenues and profitability in the quarters ahead.
Earnings Whispers
Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 (Hold) for a likely earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
That is not the case here as we will see below.
Earnings ESP: General Electrichas an Earnings ESP of -4.76%. This is because the Zacks Consensus Estimate for the stock is currently pinned at 21 cents, a penny higher than the Most Accurate Estimate.
General Electric Company Price and EPS Surprise
General Electric Company Price and EPS Surprise | General Electric Company Quote
Zacks Rank: General Electric’s Zacks Rank of 4, when combined with a negative Earnings ESP, makes surprise predictions inconclusive.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are two stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:
ABB Ltd has a Zacks Rank #3 and an Earnings ESP of +1.33%. You can see the complete list of today’s Zacks #1 Rank stocks here.
ITT Inc. (ITT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +1.41%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>