General Electric (GE) is experiencing a remarkable surge in its stock value, attributed to the revival of global air travel and the improved profitability of its power division.
High Expectations for Second-Quarter Earnings
With second-quarter earnings set to be announced early on Tuesday, all eyes are on GE’s financial performance. The soaring stock prices, coupled with the anticipation on Wall Street, have intensified the scrutiny.
Analysts have predicted earnings per share of 46 cents from sales totaling $14.8 billion. Comparatively, GE reported adjusted EPS of 27 cents from adjusted sales of $13.7 billion in the first quarter of this year and adjusted EPS of 61 cents from sales of $17.9 billion in the second quarter of 2022.
Although there has been a decline in sales and earnings over the past year, it is worth noting that this is only the second quarter reported after GE spun off its healthcare operation, now known as GE HealthCare Technologies (GEHC), in early January.
Investor Optimism and Strong Stock Performance
Investors are eagerly anticipating an exceptional performance in this quarter’s results. The robust upward trajectory of GE’s stock bolsters this expectation. Over the past three months, GE shares have surged by approximately 37%, with a year-to-date increase of 67% and an astounding 108% increase over the past 52 weeks. The improved profitability and increased free cash flow resulting from the spinoffs of GE Healthcare and GE’s energy business early next year significantly contribute to this positive outlook.
In contrast, shares of another aerospace-focused industrial conglomerate, RTX (RTX), have experienced a contrasting trend. RTX shares have declined by about 2% over the past six months, are down approximately 4% year to date, and have only risen by about 3% over the past year.
GE’s Quarterly Report: Wall Street Optimistic
Wall Street is showing increased confidence in General Electric (GE) ahead of its quarterly report. Analysts are projecting GE’s adjusted EPS for 2023 to be $2.06, surpassing the company’s own guidance range of $1.70 to $2 a share by over 20 cents. This optimistic projection is uncommon, as analysts typically align with management teams’ forecasts.
GE’s energy businesses and aerospace division will be in focus during the earnings report. As the company’s largest division, aerospace plays a significant role in shaping GE’s overall performance. The recent Paris Airshow highlighted GE’s strong presence in the aerospace industry.
Analysts are particularly interested in any potential wind turbine quality issues similar to those reported by competitor Siemens Gamesa, which is owned by Siemens Energy. Any disclosure of such issues could impact GE’s stock performance.
On Monday, GE’s stock remained relatively unchanged, while the S&P 500 and Dow Jones Industrial Average saw modest gains of 0.3% and 0.5% respectively.
