What to expect from General Electric's (GE) earnings release next week

NYSE: GE | General Electric Company  News, Ratings, and Charts

GE – GE is scheduled to report first-quarter 2019 results on Apr 30, before the market opens.

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General Electric Company GE is scheduled to report first-quarter 2019 results on Apr 30, before the market opens.

This industrial conglomerate’s financial performance in the last four quarters was mixed, having recorded better-than-expected results twice and laggingestimates in the other two. The company’s avera ge earnings surprise was a positive 3.03%. In the last reported quarter, its earnings of 17 cents lagged the Zacks Consensus Estimate of 18 cents by 5.6%.

In the past three months, the company’s shares have increased 2.2% compared with the industry ‘s growth of 14%.

Let us see how things are shaping up for General Electric this quarter.

Factors Influencing GE’s Performance

The Power segment will be important for General Electric’s performance in the first quarter. Once a growth driver, the segment is currently dealing with a number of headwinds, including growing popularity of renewable energy sources, geopolitical tensions, overcapacity in the industry, issues with project execution and others. The Zacks Consensus Estimate for the Power segment’s revenues in the first quarter is pegged at $5,301 million, below $7,222 million generated in the year-ago quarter.

Further, reorganization of the Power segment into two separate units – the first with gas lifecycle business, and the other with grid, nuclear, steam and power conversion businesses – is predicted to be beneficial. A look at annual projection for the segment will give a fair idea about the to-be-reported quarter’s results. For 2019, the company expects Power’s organic revenues to decline in a high-single digit and margin is likely to be positive.

The Aviation segment might gain from healthy growth in air travel globally as well as from increased shipments of LEAP engines and rise in air freight volume. The Zacks Consensus Estimate for the Aviation segment’s revenues in the first quarter is pegged at $7,796 million, above $7,112 million generated in the year-ago quarter. For 2019, the company anticipates organic sales to increase in a high-single digit on the back of strengthening services and military businesses. Margin is predicted to be roughly 20%.

Conversely, Renewable Energy might benefit from project builds and improvement in shipments. The Zacks Consensus Estimate for the Renewable Energy segment’s revenues in the first quarter is pegged at $1,956 million, above $1,646 million generated in the year-ago quarter. However, pricing pressures due to competition as well as the Alstom joint venture, and tariff issues between the United States and China are concerning. For 2019, the segment’s organic revenues are predicted to increase in double-digits and margin to contract.

In addition, the company believes that it will gain from launch of the digital business, focus on expanding commercially in emerging markets, efforts to reduce leverage and exposure to the GE Capital business.

The Zacks Consensus Estimate for the Industrial segment’s revenues in the to-be-reported quarter is currently pegged at $26,110 million, reflecting a decline of 4.7% from the previous year’s reported figure of $27,395 million. However, positive average sales surprise of 1.43% for the last four quarters is encouraging. Profit for the Industrial segment is likely to decrease 10.1% year over year to $2,404 million.

GE Capital’s Zacks Consensus Estimate for sales in the first quarter is pegged at $2,132 million, suggesting a decline from $2,173 million reported in the year-ago quarter.

Earnings Whispers

Our proven model provides some idea about stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter .

The case with General Electric has been provided below.

Earnings ESP: The company has an Earnings ESP of -62.50%, as the Most Accurate Estimate of 3 cents is below the Zacks Consensus Estimate of 8 cents.

Zacks Rank: General Electric currently carries a Zacks Rank #3.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.


General Electric Co. shares fell $0.01 (-0.10%) in after-hours trading Friday. Year-to-date, GE has gained 26.55%, versus a 17.92% rise in the benchmark S&P 500 index during the same period.

GE currently has a StockNews.com POWR Rating of D (Sell), and is ranked #30 of 36 stocks in the Industrial – Manufacturing category.


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