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General Electric (GE) Q2 Earnings Beat, Raises 2023 EPS View
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General Electric Company (GE - Free Report) reported second-quarter 2023 adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of adjusted earnings of 46 cents per share. The bottom line decreased 12.8% year over year.
Total revenues of $15,861 million beat the consensus estimate of $15,085 million. The top line increased 14.9% year over year.
Segmental Discussion
GE started reporting its revenues under two segments, effective from the first quarter of 2023, namely GE Aerospace and GE Vernova. The company completed the spin-off of GE HealthCare into an independent publicly traded company, retaining an approximately 19.9% stake in GE HealthCare’s common stock.
Aerospace revenues jumped 28% year over year to $7,860 million in the reported quarter, driven by continued growth in demand for commercial air travel. The Zacks Consensus Estimate for the quarter was $7443 million. Organic revenues rose 28% year over year. Orders grew 37% year over year.
The GE Vernova has two subsegments, namely Renewable Energy and Power.
The Renewable Energy segment’s revenues totaled $3,849 million, up 24% year over year. The Zacks Consensus Estimate for the quarter was $3,241 million. Organically, the same increased 27%. Results benefited from higher equipment revenues across all businesses, most notably in Onshore Wind, Grid and Offshore Wind. Orders increased favorably year over year on a reported basis.
The Power segment’s revenues were down 1% year over year to $4,152 million. The consensus estimate for the quarter was $4,169 million. Organic revenues decreased 2%. Lower aeroderivative shipments and a reduction in steam power equipment due to the ongoing exit of new build coal hurt its performance. Orders grew 7% on a reported basis year over year.
General Electric Company Price, Consensus and EPS Surprise
In the quarter under review, General Electric’s cost of sales increased 17.5% year over year to $12,362 million. Selling, general and administrative expenses increased 29.8% year over year to $1,817 million. Research and development expenses totaled $455 million, reflecting an increase of 3.6% year over year.
General Electric’s adjusted profit was $1,396 million, up 37% year over year. The margin in the quarter was 8.8%, up 120 basis points. On a reported basis, the Aerospace segment reported a profit of $1,479 million, up 29% year over year. The Renewable Energy sub-segment (Part of GE Vernova) incurred a loss of $359 million, compared with a loss of $419 million in the year-ago quarter. The Power sub-segment (part of GE Vernova) reported a profit of $377 million, up 18% year over year.
Balance Sheet and Cash Flow
Exiting the second quarter, General Electric had cash, cash equivalents and restricted cash of $12,766 million, compared with $15,810 million at the end of December 2022. The company’s long-term borrowings were $19,900 million at the end of the second quarter, compared with $20,320 million at the end of December 2022.
Adjusted free cash inflow in the reported quarter was $517 million against the free cash outflow of $976 million at the end of December 2022.
In the first six months of 2023, GE rewarded its shareholders with a dividend payment of $350 million, up 19.1% year over year. General Electric repurchased about 6.2 million shares for $0.6 billion during the second quarter.
Outlook
GE has increased its 2023 earnings per share guidance. Adjusted earnings are predicted in the band of $2.10-$2.30 per share, compared with $1.70-$2.00 per share expected earlier. The Zacks Consensus Estimate for the same is $2.03 per share. General Electric expects low-double-digit revenue growth in 2023, compared with high-single-digit growth predicted earlier. GE expects a free cash flow of approximately $4.1-$4.6 billion for the ongoing year, compared with $3.6-$4.2 billion expected earlier.
Zacks Rank & Stocks to Consider
GE currently carries Zacks Rank #3 (Hold). Some better-ranked companies are discussed below:
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 6.7% in the past year.
A. O. Smith Corp. (AOS - Free Report) presently carries a Zacks Rank #2 (Buy). AOS’ earnings surprise in the last four quarters was 8%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 0.9% for 2023. The stock has gained 27.8% in the past year.
Griffon Corp. (GFF - Free Report) carries a Zacks Rank of 2 at present. GFF delivered a trailing four-quarter earnings surprise of 31.6%, on average.
In the past 60 days, Griffon’s earnings estimates have increased 5% for fiscal 2023. The stock has surged 54.2% in the past year.
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General Electric (GE) Q2 Earnings Beat, Raises 2023 EPS View
General Electric Company (GE - Free Report) reported second-quarter 2023 adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of adjusted earnings of 46 cents per share. The bottom line decreased 12.8% year over year.
Total revenues of $15,861 million beat the consensus estimate of $15,085 million. The top line increased 14.9% year over year.
Segmental Discussion
GE started reporting its revenues under two segments, effective from the first quarter of 2023, namely GE Aerospace and GE Vernova. The company completed the spin-off of GE HealthCare into an independent publicly traded company, retaining an approximately 19.9% stake in GE HealthCare’s common stock.
Aerospace revenues jumped 28% year over year to $7,860 million in the reported quarter, driven by continued growth in demand for commercial air travel. The Zacks Consensus Estimate for the quarter was $7443 million. Organic revenues rose 28% year over year. Orders grew 37% year over year.
The GE Vernova has two subsegments, namely Renewable Energy and Power.
The Renewable Energy segment’s revenues totaled $3,849 million, up 24% year over year. The Zacks Consensus Estimate for the quarter was $3,241 million. Organically, the same increased 27%. Results benefited from higher equipment revenues across all businesses, most notably in Onshore Wind, Grid and Offshore Wind. Orders increased favorably year over year on a reported basis.
The Power segment’s revenues were down 1% year over year to $4,152 million. The consensus estimate for the quarter was $4,169 million. Organic revenues decreased 2%. Lower aeroderivative shipments and a reduction in steam power equipment due to the ongoing exit of new build coal hurt its performance. Orders grew 7% on a reported basis year over year.
General Electric Company Price, Consensus and EPS Surprise
General Electric Company price-consensus-eps-surprise-chart | General Electric Company Quote
Margin Profile
In the quarter under review, General Electric’s cost of sales increased 17.5% year over year to $12,362 million. Selling, general and administrative expenses increased 29.8% year over year to $1,817 million. Research and development expenses totaled $455 million, reflecting an increase of 3.6% year over year.
General Electric’s adjusted profit was $1,396 million, up 37% year over year. The margin in the quarter was 8.8%, up 120 basis points. On a reported basis, the Aerospace segment reported a profit of $1,479 million, up 29% year over year. The Renewable Energy sub-segment (Part of GE Vernova) incurred a loss of $359 million, compared with a loss of $419 million in the year-ago quarter. The Power sub-segment (part of GE Vernova) reported a profit of $377 million, up 18% year over year.
Balance Sheet and Cash Flow
Exiting the second quarter, General Electric had cash, cash equivalents and restricted cash of $12,766 million, compared with $15,810 million at the end of December 2022. The company’s long-term borrowings were $19,900 million at the end of the second quarter, compared with $20,320 million at the end of December 2022.
Adjusted free cash inflow in the reported quarter was $517 million against the free cash outflow of $976 million at the end of December 2022.
In the first six months of 2023, GE rewarded its shareholders with a dividend payment of $350 million, up 19.1% year over year. General Electric repurchased about 6.2 million shares for $0.6 billion during the second quarter.
Outlook
GE has increased its 2023 earnings per share guidance. Adjusted earnings are predicted in the band of $2.10-$2.30 per share, compared with $1.70-$2.00 per share expected earlier. The Zacks Consensus Estimate for the same is $2.03 per share. General Electric expects low-double-digit revenue growth in 2023, compared with high-single-digit growth predicted earlier. GE expects a free cash flow of approximately $4.1-$4.6 billion for the ongoing year, compared with $3.6-$4.2 billion expected earlier.
Zacks Rank & Stocks to Consider
GE currently carries Zacks Rank #3 (Hold). Some better-ranked companies are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 6.7% in the past year.
A. O. Smith Corp. (AOS - Free Report) presently carries a Zacks Rank #2 (Buy). AOS’ earnings surprise in the last four quarters was 8%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 0.9% for 2023. The stock has gained 27.8% in the past year.
Griffon Corp. (GFF - Free Report) carries a Zacks Rank of 2 at present. GFF delivered a trailing four-quarter earnings surprise of 31.6%, on average.
In the past 60 days, Griffon’s earnings estimates have increased 5% for fiscal 2023. The stock has surged 54.2% in the past year.