What to Look For in GE's Q3 Report

Industrials

Published: October 29, 2018 1:30 pm

Last Updated: January 11, 2020 3:41 pm

General Electric Co. (NYSE: GE) is scheduled to release its quarterly results before the markets open on Tuesday. Thomson Reuters consensus estimates call for $0.20 in earnings per share (EPS) and $29.92 billion in revenue. In the same period of last year, GE said it had $0.29 in EPS and $33.47 billion in revenue.

While there is a case that GE is better off as a whole entity and that separating GE’s various debt instruments from unit to unit would be difficult, there is the very serious notion that nothing else may work. What if Wall Street continues to treat the combined General Electric as a company named General Eclectic?

Former CEO John Flannery bombed in convincing Wall Street that his strategy was going to turn GE around. It’s now up to new CEO Larry Culp, who is only 55 years old. Culp previously served as chief executive officer and president of Danaher from 2000 to 2014, leading a transformation from an industrial manufacturer into a leading science and technology company. What does this tell you about GE as being an industrial manufacturing outfit?

If you look beyond GE’s press release, the company noted that Culp effectively executed a disciplined capital allocation approach and that he helped with a series of strategic acquisitions and dispositions and targeted investing in high-impact organic growth and margin expansion.

GE also noted that, under Culp, Danaher delivered strong free cash flow to drive long-term shareholder value and that Danaher’s market capitalization and revenues grew fivefold under his 14-year tenure.

Although Culp was only appointed to the role recently, this coming earnings report will give GE investors a clearer picture of what to expect.

Excluding Monday’s move, GE has underperformed the broad markets, with its stock down 47% in the past 52 weeks. In just 2018 alone the stock is down 35%.

A few analysts weighed in on GE ahead of the report:

JPMorgan has a Sell rating with a $10 price target.
Credit Suisse has a Neutral rating and a $15 price target.
Citigroup has a Neutral rating with a $19 price target.
Barclays has an Overweight rating and a $16 price target.
Merrill Lynch has a Hold rating with a $14 price target.
Gordon Haskett has a Sell rating.

Shares of GE were last seen up 1% at $11.42 on Monday, in a 52-week range of $11.17 to $20.75. The stock has a consensus analyst price target of $15.75.