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General Electric (GE) Q2 Earnings & Revenues Top, Increase Y/Y

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General Electric Company (GE - Free Report) reported impressive second-quarter 2022 results. GE’s earnings surpassed the Zacks Consensus Estimate by 105.3%. Sales beat in the quarter was 3.6%.

The industrial conglomerate’s adjusted earnings were 78 cents per share in the second quarter, beating the Zacks Consensus Estimate of 38 cents. The bottom line increased 95% from the year-ago quarter’s figure of 40 cents primarily on sales growth.

Revenue Details

In the quarter under review, General Electric’s consolidated revenues were $18,646 million, reflecting a year-over-year increase of 2%. The results were driven by a gain in the Healthcare and Aerospace segments’ performances, partially offset by a weakness in the Power and Renewable Energy segments.

GE’s top line surpassed the Zacks Consensus Estimate of $18,001 million.

The performance of Aerospace, Healthcare, Renewable Energy and Power is discussed below:

Aerospace revenues increased 27% year over year to $6,127 million and orders grew 26%. Organically, growth rates for revenues and orders were 27% and 26%, respectively. The high volume of shop visits significantly benefited Commercial Services revenues, partially offset by a decline in Commercial Engines revenues due to supply-chain constraints.

Healthcare revenues in the reported quarter totaled $4,519 million, increasing 1% year over year. The segment’s orders grew 1% on an organic basis. The segment gained from a 5% increase in services organic sales while equipment revenues declined slightly.  Tailwind in imaging, ultrasound, and healthcare systems services aided the results. However, supply shortages and the COVID-19 impact were spoilsports in the quarter.

Renewable Energy revenues totaled $3,099 million, down 23% year over year. Organically, the segment’s sales were down 20%. Its orders decreased 3% in the reported quarter. Softness in Onshore Wind revenues adversely impacted the segment’s performance. Growth in services revenues was a relief.

The Power segment’s revenues were down 2% year over year to $4,202 million. Organically, sales increased 4%. However, the segment’s orders decreased 16% year over year (or down 13% organically). The segment suffered lower shipment volumes.

Margin Profile

In the quarter under review, General Electric’s cost of sales was down 2.8% year over year to $13,244 million. It represented 71% of the quarter’s revenues compared with 74.6% in the year-ago quarter. Selling, general and administrative expenses decreased 5% to $2,720 million. The same was 14.6% of the quarter’s revenues compared with 15.7% in the year-ago quarter. Research and development expenses totaled $696 million, reflecting an increase of 15.2%. The metric represented 3.7% of the quarter’s revenues compared with 3.3% in the year-ago quarter.

General Electric’s adjusted operating profit was $1,663 million, up 81% year over year. Margin in the quarter was 9.3%, up 400 basis points (bps).

On a reported basis, the Power segment recorded operating earnings of $320 million compared with $299 million in the year-ago quarter. Renewable Energy recorded a loss of $419 million compared with a loss of $99 million in second-quarter 2021. The Aerospace segment’s earnings were $1,148 million compared with $176 million in the year-ago quarter. The Healthcare segment’s profits decreased 18.7% to $651 million.

Interest and other financial charges decreased 19.7% year over year to $379 million.

Balance Sheet and Cash Flow

Exiting the second quarter of 2022, General Electric had cash and cash equivalents of $13.2 billion, up from $12.8 billion recorded at the end of the previous quarter. Borrowings were $32.5 billion, up from $28.6 billion at the end of the previous quarter.

Non-GAAP free cash outflow totaled $718 million in the first six months compared with $3,162 million cash outflow recorded in the year-ago period.

Zacks Rank & Stocks to Consider

GE currently carries a Zacks Rank #4 (Sell).

Some better-ranked companies are discussed below.

Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GFF’s earnings surprise in the last four quarters was 97%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

In the past 60 days, Griffon’s earnings estimates have increased 28.9% for fiscal 2022 (ending September 2022). The stock has rallied 25.5% in the past six months.

Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank of 1. GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average.

GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 18.5% in the past six months.

Titan International, Inc. (TWI - Free Report) presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.

In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 64.9% in the past six months.

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