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General Electric Withdraws 2020 View on Coronavirus Concerns
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General Electric Company (GE - Free Report) on Apr 9 communicated its concerns related to the uncertainties associated with the coronavirus (COVID-19) outbreak. It provided preliminary insight into first-quarter 2020 results and suspended projections for 2020.
It is worth noting here that General Electric’s share price decreased 2.2% on Apr 9, eventually closing the trading session at $7.14.
Inside the Headlines
The conglomerate’s first-quarter 2020 results are predicted to be weaker than previously expected. Adjusted earnings per share are expected to be well below the earlier forecast of 10 cents. Industrial free cash flow is expected to be near ($2) billion mentioned earlier.
It expects to release the final results for the first quarter of 2020 on Apr 29, 2020, before market open. The Zacks Consensus Estimate for the company’s earnings per share is currently pegged at 10 cents. The consensus estimate for revenues is pegged at $20.8 billion.
In addition, General Electric has withdrawn projections for 2020. In March, it had predicted Industrial’s organic revenues growth in a low-single-digit range and expansion in adjusted margin (on an organic basis) of 0-75 basis points. Industrial free cash was expected to be $2-$4 billion. Adjusted earnings for 2020 were expected to be 50-60 cents per share.
The conglomerate’s chairman and CEO — H. Lawrence Culp, Jr. — also stated that the net proceeds of $20 billion received from the divestment of its BioPharma business to Danaher Corporation (DHR - Free Report) will help it lower its leverage. Notably, the divestment was completed on Mar 31, 2020.
Also, the company noted that necessary cash and cost-related measures are being taken to deal with the risks associated with the pandemic. Also, workers’ safety, the continuation of providing services to customers, and preserving the business strength during the difficult period remain its priorities.
Other Developments Related to Coronavirus Outbreak
On Mar 23, 2020, the company noted that its GE Aviation intends on lowering the U.S. workforce by 10%, while its president and CEO — David Joyce — will give up 50% of his salary, beginning April 2020. Also, other actions, including the reduction in the contingent workforce, refraining from hiring and lowering spending (non-essential), are being considered. In the coming three months, maintenance, repair and overhaul (“MRO”) activities will be hurt badly, resulting in no work for 50% employees. General Electric believes that the actions will result in cost savings of $500 million to $1 billion for 2020.
Additionally, the company communicated that GE Healthcare is experiencing lower demand for equipment used in medical procedures (due to either cancellation or postponement of elective procedures). However, the production of scanning and other monitoring products (including mobile X-ray systems, ventilators, CTs, patient monitors and ultrasound devices) have been increased by GE Healthcare. The initiatives have been taken to help better diagnose patients infected with the coronavirus.
Zacks Rank, Share Price Performance and Estimate Trend
General Electric currently has a market capitalization of $62.4 billion and a Zacks Rank #3 (Hold).
The company’s share price has decreased 36.1% in the past three months compared with 19.9% decline recorded by the industry.
In the past 60 days, its earnings estimates for 2020 and 2021 have been revised. Currently, the Zacks Consensus Estimate for General Electric’s earnings is pegged at 43 cents for 2020 and 65 cents for 2021, suggesting declines of 20.4% and 9.7% from the respective 60-day-ago figures.
In the past 30 days, earnings estimates for both companies have been unchanged for the current year.
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General Electric Withdraws 2020 View on Coronavirus Concerns
General Electric Company (GE - Free Report) on Apr 9 communicated its concerns related to the uncertainties associated with the coronavirus (COVID-19) outbreak. It provided preliminary insight into first-quarter 2020 results and suspended projections for 2020.
It is worth noting here that General Electric’s share price decreased 2.2% on Apr 9, eventually closing the trading session at $7.14.
Inside the Headlines
The conglomerate’s first-quarter 2020 results are predicted to be weaker than previously expected. Adjusted earnings per share are expected to be well below the earlier forecast of 10 cents. Industrial free cash flow is expected to be near ($2) billion mentioned earlier.
It expects to release the final results for the first quarter of 2020 on Apr 29, 2020, before market open. The Zacks Consensus Estimate for the company’s earnings per share is currently pegged at 10 cents. The consensus estimate for revenues is pegged at $20.8 billion.
In addition, General Electric has withdrawn projections for 2020. In March, it had predicted Industrial’s organic revenues growth in a low-single-digit range and expansion in adjusted margin (on an organic basis) of 0-75 basis points. Industrial free cash was expected to be $2-$4 billion. Adjusted earnings for 2020 were expected to be 50-60 cents per share.
The conglomerate’s chairman and CEO — H. Lawrence Culp, Jr. — also stated that the net proceeds of $20 billion received from the divestment of its BioPharma business to Danaher Corporation (DHR - Free Report) will help it lower its leverage. Notably, the divestment was completed on Mar 31, 2020.
Also, the company noted that necessary cash and cost-related measures are being taken to deal with the risks associated with the pandemic. Also, workers’ safety, the continuation of providing services to customers, and preserving the business strength during the difficult period remain its priorities.
Other Developments Related to Coronavirus Outbreak
On Mar 23, 2020, the company noted that its GE Aviation intends on lowering the U.S. workforce by 10%, while its president and CEO — David Joyce — will give up 50% of his salary, beginning April 2020. Also, other actions, including the reduction in the contingent workforce, refraining from hiring and lowering spending (non-essential), are being considered. In the coming three months, maintenance, repair and overhaul (“MRO”) activities will be hurt badly, resulting in no work for 50% employees. General Electric believes that the actions will result in cost savings of $500 million to $1 billion for 2020.
Additionally, the company communicated that GE Healthcare is experiencing lower demand for equipment used in medical procedures (due to either cancellation or postponement of elective procedures). However, the production of scanning and other monitoring products (including mobile X-ray systems, ventilators, CTs, patient monitors and ultrasound devices) have been increased by GE Healthcare. The initiatives have been taken to help better diagnose patients infected with the coronavirus.
Zacks Rank, Share Price Performance and Estimate Trend
General Electric currently has a market capitalization of $62.4 billion and a Zacks Rank #3 (Hold).
The company’s share price has decreased 36.1% in the past three months compared with 19.9% decline recorded by the industry.
In the past 60 days, its earnings estimates for 2020 and 2021 have been revised. Currently, the Zacks Consensus Estimate for General Electric’s earnings is pegged at 43 cents for 2020 and 65 cents for 2021, suggesting declines of 20.4% and 9.7% from the respective 60-day-ago figures.
General Electric Company Price and Consensus
General Electric Company price-consensus-chart | General Electric Company Quote
Stocks to Consider
Two better-ranked stocks in the industry are Griffon Corporation (GFF - Free Report) and Koninklijke KPN N.V. (KKPNF - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 30 days, earnings estimates for both companies have been unchanged for the current year.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>