General Electric Exceeds Q3 Earnings Estimates

General Electric Company (GE) shares rose 2% to close at $107.44 on Tuesday after its third-quarter earnings exceeded expectations. However, Q3 revenues missed consensus estimates for the technologies and solutions provider to the aviation, healthcare, power and renewable energy industries.

Adjusted earnings of $0.57 per share surged 50% year-over-year, rising above the Street’s estimate of $0.43 per share. The company reported revenues of $18.4 billion (down 1%), missing analysts’ estimates of $19.25 billion.

GE Industrial organic revenues stood at $17.6 billion, down 1% year-over-year. Additionally, free cash flows came in at $1.7 billion, significantly higher on a year-over-year basis. (See General Electric stock charts on TipRanks)

Looking ahead, the CEO of General Electric, H. Lawrence Culp, Jr., commented, “The teams are managing through a challenging operating environment, including global supply chain disruptions and onshore wind market pressure due to the U.S. Production Tax Credit. Against that backdrop, we’re raising our 2021 EPS expectations and narrowing our full-year free cash flow outlook.”

Culp added, “With leading positions in our markets, we are serving customers with vital equipment and services that shape the future of flight, advance precision health, and lead the energy transition. We remain on track to deliver high single-digit free cash flow margins over time.”

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The company now expects adjusted EPS to be in the range of $1.80 to $2.10 for 2021, against the consensus estimate of $1.94. Additionally, GE Industrial free cash flow is expected to be between $3.75 billion and $4.75 billion, while GE Industrial organic revenue is likely to remain flat.

Other Developments

General Electric and AerCap have received all necessary regulatory approvals for the GE Capital Aviation Services (GECAS) transaction, which is likely to close on November 1. The company expects to use the proceeds of the deal to further reduce debt, with an expected total reduction of $75 billion since the end of 2018.

GE will acquire advanced surgical visualization company BK Medical through a $1.45 billion cash deal.

Wall Street’s Take

Encouraged by third-quarter results and the company’s strong fundamentals, Goldman Sachs analyst Joe Ritchie maintained a Buy rating on the stock with price target of $136 (26.58% upside potential).

The rest of the Street is cautiously optimistic about the stock, with it earning a Moderate Buy consensus rating based on 7 Buys and 4 Holds. The average General Electric price target of $109.18 implies 1.62% upside potential to current levels. Shares have jumped 89.2% over the past year.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 83% Bullish on GE, compared to a sector average of 67%.

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