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General Electric (GE) to Post Q2 Earnings: What's in Store?

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General Electric Company (GE - Free Report) is scheduled to report second-quarter 2020 results on Jul 29, before market open.

The company delivered better-than-expected earnings in three of the last four quarters and lagged estimates in the remaining one. The average trailing four-quarter surprise is 16.67%. In the last reported quarter, its earnings of 5 cents per share missed the Zacks Consensus Estimate of 6 cents by 16.67%.

In the past three months, shares of the company have decreased 0.6% against the industry’s growth of 7.1%.



Let us delve deeper.

Key Factors and Estimates for Q2

General Electric’s results for the second quarter are expected to reflect the impacts of the prevalent coronavirus pandemic on its operations. It expects its financial numbers to decline on a sequential basis. Notably, the company’s earnings and revenues in the first quarter were 5 cents per share and $20,524 million, respectively.

The industry player expects to record free cash outflow of $3.5-$4.5 billion for the second quarter.
 
Meanwhile, cost-saving measures and growth in digital business might aid the impending quarterly results. Also, a healthy liquidity position is expected to have helped the company effectively deal with the pandemic situation and firmly focus on deleveraging the balance sheet.

The Zack Consensus Estimate for General Electric’s loss per share is pegged at 14 cents. However, the company delivered earnings of 17 cents in the year-ago quarter and 5 cents in the first quarter. The consensus estimate for revenues of $17,011 million suggests a 41% plunge from the year-ago quarter’s reported figure and a 17.1% decline from the sequentially posted number.

For Aviation segment, the pandemic is believed to have been a major spoilsport in substantially shrinking in air traffic, globally. In turn, the company expects weakness in demand for its commercial jet engines during the second quarter. The Zacks Consensus Estimate for the Aviation segment is pegged at $4,923 million, indicating a 37.5% drop from the year-ago reported figure and a 28.6% fall from the number recorded sequentially.

Additionally, the impacts of delays in procedures at pharmaceutical diagnostics and healthcare systems as well as the pandemic-led demand for scanning and monitoring products might get reflected in Healthcare’s results. The Zacks Consensus Estimate for Healthcare revenues stands at $3,794 million, implying a decline of 23.1% from the prior-year reported figure and a 19.7% fall from the sequentially registered number.

Apart from Aviation and Healthcare segments, the revenue estimate for the Power segment is pegged at $3,268 million, hinting at a decline of 30.2% from the year-ago reported figure and an 18.8% deterioration from the number reported sequentially. However, Renewable Energy’s revenue estimate stands at $3,331 million, suggesting an 8.2% decline from the year-ago quarter’s reported number and growth of 4.3% from the previous quarter’s reported figure.

Notably, the Zacks Consensus Estimate for the Industrial segment’s (comprising Power, Aviation, Renewable Energy and Healthcare) revenues during the to-be-reported quarter is pegged at $14,606 million, suggesting a 46% decline from the year-ago quarter’s reported number and a 29.6% decrease from the first quarter’s reported figure. Losses for the Industrial segment are likely to be $611 million. Meanwhile, a profit of $2,359 million was reportedly delivered in the year-ago quarter as well as $1,441 million in the previous quarter.

Earnings Whispers

Our proven model doesn’t predict an earnings beat for General Electric this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here as you will see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: General Electric has an Earnings ESP of +2.44%. The Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 13 cents and 14 cents, respectively.

General Electric Company Price, Consensus and EPS Surprise

General Electric Company Price, Consensus and EPS Surprise

General Electric Company price-consensus-eps-surprise-chart | General Electric Company Quote

Zacks Rank: General Electric currently carries a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Here are some companies that you may want to consider as according to our model, these have the right combination of elements to beat on earnings this season:

Fortune Brands Home Security, Inc. currently has an Earnings ESP of +9.08% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crane Co. (CR - Free Report) presently has an Earnings ESP of +10.64% and a Zacks Rank #2.

3M Company (MMM - Free Report) presently has an Earnings ESP of +3.62% and a Zacks Rank #3.

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