Two major giants in the U.S. industrials sector, General Electric and Honeywell released their first -quarter 2017 earnings on April 21, 2017. Depressed oil prices primarily resulted in the decline in revenues of General Electric’s oil and gas division. On the other hand, higher-than-expected sales in the Aerospace and Energy businesses led to the rise in Honeywell’s revenues.
General Electric
Shares of General Electric Company (GE - Free Report) were down 2.38% at market close on Friday, April 21, 2017, despite beating earnings estimates. The company reported a 0.68% decrease in first-quarter 2017 revenues on a year-over –year basis. However, it beat the Zacks Consensus Estimate on both earnings and revenues (read: GE Comfortably Beats on Q1 Earnings, 2017 View Reiterated).
Earnings Discussion
General Electric reported non-GAAP earnings per share (EPS) of $0.21 for the first quarter 2017, flat year over year but ahead of the Zacks Consensus Estimate of $0.17. Moreover, revenues of $27.66 billion came ahead of the consensus mark of $27.36 billion. GE continues to expect its full-year 2017 EPS to be in a range of $1.60-$1.70.
The company reported earnings from continuing operations attributable to GE common shareowners of $858 million, up from $248 million a year ago. First-quarter 2017 orders increased 10% to $25.7 billion, from $23.5 billion a year ago. Moreover, GE’s backlog increased 3% to $324.3 billion from $316.1 billion a year ago.
Revenue Performance
Industrial segment revenues increased to $26.016 billion from $25.869 billion a year ago.
Power revenues rose to $6.089 billion from $5.204 billion in the year-ago period.
Renewable Energy revenues were up to $2.044 billion from $1.669 billion a year ago.
Oil & Gas revenues however dropped to $3.001 billion from $3.314 billion a year ago.
Aviation revenues increased to $6.804 billion from $6.262 billion a year ago.
Healthcare revenue rose to $4.291 billion from $4.183 billion a year ago.
Transportation revenues rose to $1.039 billion from $981 million a year ago.
Energy Connections & Lighting revenues dropped to $2.747 billion from $4.256 billion a year ago.
Baker Hughes Deal
Chairman and CEO of General Electric, Jeff Immelt expects the combination of GE Oil & Gas and Baker Hughes to close by mid 2017.
Honeywell
Shares of Honeywell International (HON - Free Report) were up 2.67% at market close on Friday, April 21, 2017, as its results were better than expected. Though the company reported a 0.31% decrease in quarterly revenues year over year, it successfully beat the Zacks Consensus Estimate in the first-quarter of 2017 on both earnings and revenues (read: Honeywell Beats on Q1'17 Earnings and Revenues).
Earnings Discussion
Honeywell reported non-GAAP earnings per share of $1.66, up 8.5% year over year and beating the Zacks Consensus Estimate of $1.62 for first-quarter 2017. Moreover, revenues of $9.492 billion came ahead of the consensus mark of $9.332 billion. Honeywell raised the low end of its full-year 2017 EPS guidance to a range of $6.90-$7.10.
Revenue Performance
Aerospace revenues fell to $3.546 billion from $3.705 billion a year ago.
Home and Building Technologies revenue rose to $2.533 billion from $2.477 billion a year ago.
Performance Materials and Technologies fell to $2.069 billion from $2.281 billion a year ago.
Safety and Productivity Solutions revenue rose to $1.324 billion from $1.059 billion a year ago.
In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to General Electric and Honeywell.
Industrial Select Sector SPDR Fund (XLI - Free Report)
This fund focuses on providing exposure to the U.S. industrial sector. It has AUM of $10.77 billion and charges a fee of 14 basis points a year. It has an 8.92% allocation to General Electric and a 4.77% allocation to Honeywell (as of April 21, 2017). The fund returned 16.51% in the past one year and 5.13% in the year-to-date time frame (as of April 21, 2017). It closed 0.09% higher on Friday, April 21, 2017. XLI currently has a Zacks ETF Rank of #2 (Buy) with a Medium risk outlook (read: 4 Top Sector ETFs & Stocks to Outperform in Q1 Earnings).
Vanguard Industrials ETF (VIS - Free Report)
This ETF is a pure play on the U.S. industrials sector. It has AUM of $3 billion and charges a fee of 10 basis points a year. It has 9.9% allocation to General Electric and a 3.4% allocation to Honeywell (as of March 31, 2017). The fund returned 16.94% in the past one year and 4.20% in the year-to-date time frame (as of April 21, 2017). It closed 0.05% higher on Friday, April 21, 2017. VIS currently has a Zacks ETF Rank of #2 with a Medium risk outlook.
iShares U.S. Industrials ETF (IYJ - Free Report)
This ETF is a relatively costly bet on the U.S. industrial sector. It has AUM of $979.87 million and charges a fee of 44 basis points a year. It has 9.11% allocation to General Electric and 3.25% allocation to Honeywell (as of April 20, 2017). The fund returned 16.50% in the past one year and 4.86% in the year-to-date time frame (as of April 21, 2017). It closed flat on Friday, April 21, 2017. IYJ currently has a Zacks ETF Rank of #3 (Hold) with a Medium risk outlook.
Below is a year-to-date performance comparison of the funds, General Electric, and Honeywell International.
Source: Yahoo Finance
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Two major giants in the U.S. industrials sector, General Electric and Honeywell released their first -quarter 2017 earnings on April 21, 2017. Depressed oil prices primarily resulted in the decline in revenues of General Electric’s oil and gas division. On the other hand, higher-than-expected sales in the Aerospace and Energy businesses led to the rise in Honeywell’s revenues.
General Electric
Shares of General Electric Company (GE - Free Report) were down 2.38% at market close on Friday, April 21, 2017, despite beating earnings estimates. The company reported a 0.68% decrease in first-quarter 2017 revenues on a year-over –year basis. However, it beat the Zacks Consensus Estimate on both earnings and revenues (read: GE Comfortably Beats on Q1 Earnings, 2017 View Reiterated).
Earnings Discussion
General Electric reported non-GAAP earnings per share (EPS) of $0.21 for the first quarter 2017, flat year over year but ahead of the Zacks Consensus Estimate of $0.17. Moreover, revenues of $27.66 billion came ahead of the consensus mark of $27.36 billion. GE continues to expect its full-year 2017 EPS to be in a range of $1.60-$1.70.
The company reported earnings from continuing operations attributable to GE common shareowners of $858 million, up from $248 million a year ago. First-quarter 2017 orders increased 10% to $25.7 billion, from $23.5 billion a year ago. Moreover, GE’s backlog increased 3% to $324.3 billion from $316.1 billion a year ago.
Revenue Performance
Industrial segment revenues increased to $26.016 billion from $25.869 billion a year ago.
Power revenues rose to $6.089 billion from $5.204 billion in the year-ago period.
Renewable Energy revenues were up to $2.044 billion from $1.669 billion a year ago.
Oil & Gas revenues however dropped to $3.001 billion from $3.314 billion a year ago.
Aviation revenues increased to $6.804 billion from $6.262 billion a year ago.
Healthcare revenue rose to $4.291 billion from $4.183 billion a year ago.
Transportation revenues rose to $1.039 billion from $981 million a year ago.
Energy Connections & Lighting revenues dropped to $2.747 billion from $4.256 billion a year ago.
Baker Hughes Deal
Chairman and CEO of General Electric, Jeff Immelt expects the combination of GE Oil & Gas and Baker Hughes to close by mid 2017.
Honeywell
Shares of Honeywell International (HON - Free Report) were up 2.67% at market close on Friday, April 21, 2017, as its results were better than expected. Though the company reported a 0.31% decrease in quarterly revenues year over year, it successfully beat the Zacks Consensus Estimate in the first-quarter of 2017 on both earnings and revenues (read: Honeywell Beats on Q1'17 Earnings and Revenues).
Earnings Discussion
Honeywell reported non-GAAP earnings per share of $1.66, up 8.5% year over year and beating the Zacks Consensus Estimate of $1.62 for first-quarter 2017. Moreover, revenues of $9.492 billion came ahead of the consensus mark of $9.332 billion. Honeywell raised the low end of its full-year 2017 EPS guidance to a range of $6.90-$7.10.
Revenue Performance
Aerospace revenues fell to $3.546 billion from $3.705 billion a year ago.
Home and Building Technologies revenue rose to $2.533 billion from $2.477 billion a year ago.
Performance Materials and Technologies fell to $2.069 billion from $2.281 billion a year ago.
Safety and Productivity Solutions revenue rose to $1.324 billion from $1.059 billion a year ago.
In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to General Electric and Honeywell.
Industrial Select Sector SPDR Fund (XLI - Free Report)
This fund focuses on providing exposure to the U.S. industrial sector. It has AUM of $10.77 billion and charges a fee of 14 basis points a year. It has an 8.92% allocation to General Electric and a 4.77% allocation to Honeywell (as of April 21, 2017). The fund returned 16.51% in the past one year and 5.13% in the year-to-date time frame (as of April 21, 2017). It closed 0.09% higher on Friday, April 21, 2017. XLI currently has a Zacks ETF Rank of #2 (Buy) with a Medium risk outlook (read: 4 Top Sector ETFs & Stocks to Outperform in Q1 Earnings).
Vanguard Industrials ETF (VIS - Free Report)
This ETF is a pure play on the U.S. industrials sector. It has AUM of $3 billion and charges a fee of 10 basis points a year. It has 9.9% allocation to General Electric and a 3.4% allocation to Honeywell (as of March 31, 2017). The fund returned 16.94% in the past one year and 4.20% in the year-to-date time frame (as of April 21, 2017). It closed 0.05% higher on Friday, April 21, 2017. VIS currently has a Zacks ETF Rank of #2 with a Medium risk outlook.
iShares U.S. Industrials ETF (IYJ - Free Report)
This ETF is a relatively costly bet on the U.S. industrial sector. It has AUM of $979.87 million and charges a fee of 44 basis points a year. It has 9.11% allocation to General Electric and 3.25% allocation to Honeywell (as of April 20, 2017). The fund returned 16.50% in the past one year and 4.86% in the year-to-date time frame (as of April 21, 2017). It closed flat on Friday, April 21, 2017. IYJ currently has a Zacks ETF Rank of #3 (Hold) with a Medium risk outlook.
Below is a year-to-date performance comparison of the funds, General Electric, and Honeywell International.
Source: Yahoo Finance
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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