Earnings Preview: General Electric

by: theflyonthewall.com July 10, 2008 | about stocks: GE    

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General Electric (GE) is expected to report Q2 earnings Friday, July 11 before market open, with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for EPS of 54c on revenue of $45.31B. There is a tight consensus range of 53c to 54c for EPS, and $44.72B to $46.19B for revenue, according to First Call.

General Electric will try to bounce back from a tough Q1 where profits dropped 6%, EPS of 43c which was far from the average analyst estimate of 51c. When the company reported its Q1 results it gave guidance for Q2 expecting EPS of 53c to 55c, and revenue of $45B. General Electric also lowered its FY08 EPS guidance to $2.20 to $2.30 from $2.42; the consensus estimate for FY08 EPS at that time was $2.43.

Analyst Views

Sterne Agee stated on July 3 that after meeting with management the firm finds it highly unlikely General Electric's triple AAA credit rating will be reduced in the near-term. The firm also believes another earnings shortfall is unlikely and maintains its Hold rating on the stock.

Deutsche Bank stated on July 7 that it thinks the company is unlikely to post another earnings miss on Friday, but sees more downside risk to guidance than upside. The firm thinks the current valuation discount is warranted and maintains a Hold rating.

Investors will be interested to see if the company will rebound from its disappointing Q1 or if General Electric will continue to struggle in Q2.

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This article has 6 comments:

  •  
    Jul 10 02:02 PM
    If Immelt misses the Q2 numbers, the stock will take a huge beating. Welch had such a fine-tuned engine that he met or beat the guidance and never negatively surprised the street. Now, GE seems to be at an inflection point--the future is not an extrapolation of the past. Shedding some businesses should be seen not as a temporary fic but as a way to create the new business model of GE. Tomorrow is a big day for GE and Immelt. Missing the numbers twice in a row will be a huge shock to not only GE stockholders but could adversely affect the market tomorrow. .
    Reply | Link to Comment
  •  
    Jul 10 02:13 PM
    Anyone care to comment on this article:
    " General Electric Co., in an effort to recharge its profit growth, plans to spin off its entire Consumer & Industrial division -- and not just appliances.

    The GE units involved accounted for roughly $13.3 billion of the Fairfield, Conn., conglomerate's $173 billion in revenue last year, but an even smaller share of profits, earning $1 billion of the total $22 billion. The biggest component of the unit is GE's well-known appliance business, which the company said in May it would try to sell. The other major pieces are GE's lighting business, which dates to Thomas Edison's invention of the incandescent ..."

    online.wsj.com/article...

    I personally think GE would be better off spinning off its Consumer Finance and NBC divisions.
    Reply | Link to Comment
  •  
    Jul 10 02:56 PM
    I posted a short piece on GE a couple of days ago. It was acting better on Tuesday even before the market took off, and then yesteday happened. I think GE is holding its own right now as investors want to see what tomorrow brings, but I now think it isn't going to move the stock much. I think the CEO wants to reinvent the company. My guess, and it is just a guess, is that the company will eventually become more of an energy company--carbon and noncarbon. I think they will get out of finance and media if they can get the right price. I sold half of my position today on a bounce. I still want some skin in the game tomorrow when they announce, but I don't want to get skinned!
    Reply | Link to Comment
  •  
    Jul 10 03:34 PM
    GE is big player in alternative energy, wind and nuclear.
    Reply | Link to Comment
  •  
    Jul 10 04:14 PM
    Get rid of finance before close of market tomorrow !
    Then get to work!
    Reply | Link to Comment
  •  
    Jul 13 05:39 PM
    GE finance is an integral part of the overall spectrum of operations and did well for the company for many, many years. It has gotten into trouble because under Mr. Welch it was pushed to go out on its own into mortgages and other non-integrated areas. When it financed the purchase of locomotives, jet engines and large medical equipment it did well. It needs to be refocused.
    Reply | Link to Comment
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