Australia Markets open in 7 hrs 13 mins

General Electric (GE) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

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 lagging estimates in the other two. The company’s average 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.

General Electric Company Price, Consensus and EPS Surprise

 

General Electric Company Price, Consensus and EPS Surprise | General Electric Company Quote

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.

Stocks That Warrant a Look

Here is one company in the industry that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter.

ITT Inc. ITT currently carries a Zacks Rank #3 and has an Earnings ESP of +0.06%.

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

Two companies worth considering in the Zacks Industrial Products sector are Sun Hydraulics Corporation SNHY and HD Supply Holdings, Inc. HDS. These are likely to post upbeat earnings results in this quarter.

Sun Hydraulics Corporation has an Earnings ESP of +1.05% and a Zacks Rank #1 at present.
 
HD Supply Holdings, Inc. has an Earnings ESP of +1.43% and a Zacks Rank #3.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
General Electric Company (GE) : Free Stock Analysis Report
 
ITT Inc. (ITT) : Free Stock Analysis Report
 
Sun Hydraulics Corporation (SNHY) : Free Stock Analysis Report
 
HD Supply Holdings, Inc. (HDS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research