The industrial technology company General Electric (GE) is scheduled to report third-quarter 2021 earnings on October 26.
Over the past year, shares of the company have jumped almost 78%, and are now trading at over $104. Solid Q3 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.
Analysts, on average, expect General Electric to post adjusted earnings of $0.41 per share and revenues of $19.55 billion for Q3.
Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at $0.46 per share. (See GE Dividend Date and History on TipRanks)
General Electric’s Prior Quarter Snapshot
The multinational conglomerate reported outstanding second-quarter financial results, with growth across all of its business segments.
Revenues came in at $18.3 billion, up 9% year-over-year and marginally missing analysts’ expectations of $18.13 billion.
Meanwhile, adjusted earnings of $0.05 per share beat Wall Street’s expectations of $0.04 per share.
Factors to Note about General Electric
Through ongoing restructuring measures, General Electric is working to turn itself into a stronger corporation. As a result, investors should keep an eye on the company’s efforts to deleverage its balance sheet in the coming quarters.
As a part of this transformation plan, General Electric was in early negotiations with French multinational electric utility firm Electricite de France SA (EDF) for the sale of its nuclear turbines segment. The sale would result in financial inflows, allowing the firm to focus on other areas of growth.
In addition, the business is working to upgrade its power grid with digital and automated technologies, which should pay off this quarter and bring growth to the company’s Power segment.
The company’s Aviation business, which increased 10% year-over-year to $4.8 billion in the second quarter, is steadily rebounding from the coronavirus pandemic. Furthermore, the company’s numerous partnerships should aid in the expansion of revenues in this area. Persistent market-related problems, on the other hand, might have put a damper on the upcoming quarter.
The Healthcare segment is expected to perform well in the coming quarter, thanks to a rise in worldwide elective surgery volume and robust demand for non-pandemic products. However, supply restrictions may have a negative influence on the outcome.
When it comes to the balance sheet, the company has set some aggressive cash flow objectives for 2021 and beyond, implying strong cash generation in the future.
In reference to the same, GE CEO H. Lawrence Culp, Jr. expressed his optimism about the company’s future success and said, “With our focus on profitable growth and cash generation, I am confident we are well-positioned to achieve high single-digit free cash flow margins over time.”
Analyst Recommendations on General Electric
Ahead of the Q3 earnings announcement, Wells Fargo analyst Joe O’Dea initiated a Hold rating on the stock and a price target of $107.00.
Although O’Dea believes that things are improving at GE, he prefers to remain on the sidelines since the stock is reasonably valued and trading in line with its industrial rivals.
On TipRanks, General Electric stock commands a Moderate Buy consensus rating, based on 6 Buys and 4 Holds.
As for price targets, the average GE price target of $106.50 implies that the shares are fully valued at current levels.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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