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General Electric (GE) to Report Q2 Earnings: What to Expect?

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General Electric (GE) to Report Q2 Earnings: What to Expect?

General Electric's (GE) second-quarter 2018 results are likely to gain from Aviation and Renewable Energy segments. Tough operating conditions for Power might be an issue.

General Electric Company GE is scheduled to report second-quarter 2018 results on Jul 20, before the market opens.

This industrial conglomerate’s financial performance in the last four quarters was mixed, having recorded better-than-expected results in two and lagging estimates in the other two. The company’s average earnings surprise was a positive 3.27%. In the last reported quarter, the company’s earnings of 16 cents per share surpassed the Zacks Consensus Estimate of 11 cents by 45.45%.

The company’s share price movements have not been impressive. In the past six months, the stock price decreased 15.8%, underperforming 10% decline recorded by the industry it belongs to. It is worth noting here that the stock has gained 5.7% in the past month.

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

Factors Influencing GE’s Performance

In second-quarter 2018, General Electric communicated plans to restructure its business portfolio. It will separate GE Healthcare and turn it into a stand-alone company while will exit oil and gas businesses by disposing of its 62.5% interest stake in Baker Hughes, a GE company BHGE. Beside these, GE Transportation will be sold to Wabtec Corporation and efforts are on track to shrink exposure in GE Capital business. The restructuring actions will evolve General Electric into a high-tech industrial company — focused on Aviation, Power and Renewable Energy.

Rising passenger air travel (global) and growth in unit order will likely boost Aviation as well as Renewable Energy results and in turn, benefit GE’s quarterly results. Healthcare will gain from strengthening footholds in emerging markets and growth in bioprocess businesses as well as development in advanced markets. Also, the company’s initiatives to reduce its structural costs by more than $2 billion in 2018 will be advantageous.

However, the company believes that pricing issues in Renewable Energy, as well as weakness in Power due to tough operating conditions, might be concerning. The stock currently carries a Zacks Rank #4 (Sell).

Amid this backdrop, the Zacks Consensus Estimate for the Industrial segment revenues in the to-be-reported quarter is currently pegged at $28,009 million, reflecting growth of 2.2% from the previous quarter’s figure of $27,395 million. Profit for the industrial segment is likely to increase 21.9%, sequentially, to $3,262 million.

General Electric Company Price and Consensus

General Electric Company Price and Consensus | General Electric Company Quote

Stocks That Warrant a Look

Our proven model provides some idea about the 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) or 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.

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

Here are two companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Graco Inc. GGG has an Earnings ESP of +8% and a Zacks Rank of 1. The company is expected to release quarterly numbers around Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Honeywell International Inc. HON has an Earnings ESP of +0.31% and a Zacks Rank of 2. The company is likely to release earnings on Jul 20.

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Honeywell International Inc. (HON) : Free Stock Analysis Report
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Baker Hughes, a GE company (BHGE) : Free Stock Analysis Report
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