Back to top

Image: Bigstock

Will Ailing Power Segment Continue to Hurt GE in Q4 Earnings?

Read MoreHide Full Article

General Electric Company (GE - Free Report) is scheduled to report fourth-quarter 2019 results on Jan 29, 2020, before the market opens.

The Power segment comprises Gas Power and Power Portfolio. Gas Power includes General Electric’s gas lifecycle business, including Power Services and Gas Power Systems businesses. On the other hand, Power Portfolio comprises Steam Power Systems, GE Hitachi Nuclear and Power Conversion businesses.

The Power segment accounted for 18.4% of Industrial revenues in the third quarter of 2019. Apart from the Power segment, the Industrial segment includes results of Aviation, Healthcare and Renewable Energy segments.

Key Factors & Estimates for Q4

Over the past few quarters, General Electric has been suffering from the weak performance of the Power segment. In the third quarter of 2019, the segment’s orders were down 30% year over year. This trend might have continued in the fourth quarter as well.

In addition, the company believes that external and internal challenges — including project execution problems, pricing issues, overcapacity in the industry, geopolitical tensions and others — might have been spoilsports in the fourth quarter.

On the contrary, gains from General Electric’s initiatives to restructure the segment are likely to get reflected in the quarter’s results.

For the fourth quarter of 2019, the Zacks Consensus Estimate for the Power segment’s revenues is pegged at $4,785 million, suggesting a decline of 29.2% from the year-ago reported figure and sequential growth of 21.9%. The segment’s profits are expected to have improved.

Industrial’s Q4 Expectations

The Zacks Consensus Estimate for Industrial’s fourth-quarter revenues is currently pegged at $24,443 million, suggesting 14.3% growth from the previous quarter’s reported figure and a 23.2% decrease from the year-ago quarter’s number. Profits for the Industrial segment are likely to be $3,397 million, indicating 38.7% rise from the previous quarter’s reported figure and 29.8% growth from the year-ago quarter’s number. (Read more: General Electric to Post Q4 Earnings: What to Expect?)

Zacks Rank & Other Upcoming Releases

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some stocks in the industry, which are also slated to report their results soon, are Honeywell International Inc. (HON - Free Report) , Carlisle Companies Incorporated (CSL - Free Report) and Emerson Electric Co. (EMR - Free Report) . Honeywell will release results on Jan 31, Carlisle on Feb 6 and Emerson on Feb 4.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>

Published in