General Electric (GE) to Post Q3 Earnings: Is a Beat in Store?

Zacks Equity Research
·5-min read

General Electric Company GE is scheduled to report third-quarter 2020 results on Oct 28, before market open.

The company delivered better-than-expected earnings in two of the last four quarters. The average trailing four-quarter surprise is +4.47%. In the last reported quarter, the company reported a loss of 15 cents per share, whereas the Zacks Consensus Estimate was pegged at a loss of 14 cents.

In the past three months, shares of the company have increased 13.7% against the industry’s growth of 12.5%.



Let us delve deeper.

Key Factors and Estimates for Q3

General Electric’s results for the third quarter of 2020 are likely to reflect the impacts of the COVID-19 pandemic on its operations. In addition to this, growth in the digital business and savings for cost actions are expected to get reflected in third-quarter results. Financial projections for the quarter have not been provided by the company.

The Zack Consensus Estimate for General Electric’s loss per share for the third quarter is pegged at 8 cents. However, the company delivered earnings of 15 cents in the year-ago quarter and a loss of 15 cents in the second quarter of 2020. The consensus estimate for revenues of $19,149 million suggests an 18% decline from the year-ago quarter’s reported figure and a 7.9% increase sequentially.

The company’s expectations from the segments are provided below.

For the Healthcare segment, the company expected weakness in pharmaceutical diagnostics (orders falling in high-single digits) and healthcare systems (with orders declining in low-double digits) in the third quarter. Businesses are expected to have been weak in the India, Japan and Latin American regions.

The Zacks Consensus Estimate for Healthcare revenues stands at $4,106 million, implying a decline of 16.6% from the prior-year reported figure and 5.5% growth sequentially.

For the Power segment, the company expected weakness in service orders to hamper results. The Zacks Consensus Estimate for the segment’s revenues is pegged at $3,845 million, hinting at a decline of 2.1% from the year-ago reported figure and a 7.4% deterioration sequentially.

For the Aviation segment, weakness in the commercial aftermarket business and lower installation of commercial engines are expected to have influenced third-quarter performance. The Zacks Consensus Estimate for the segment’s revenues is pegged at $4,772 million, indicating a 41.2% drop from the year-ago reported figure and 8.8% growth sequentially.

Apart from the Power, Aviation and Healthcare segments, the revenue estimate for the Renewable Energy segment stands at $4,555 million in the third quarter, suggesting a 2.9% increase from the year-ago quarter’s reported number and growth of 30% from the previous quarter’s reported figure.

Notably, the Zacks Consensus Estimate for the Industrial segment’s (comprising Power, Aviation, Renewable Energy and Healthcare) revenues during the to-be-reported quarter is pegged at $17,278 million, suggesting a 19.2% decline from the year-ago quarter’s reported number and a 5.9% increase from the second quarter’s reported figure. Profit for the Industrial segment is likely to be $686 million for the third quarter of 2020. Meanwhile, a profit of $2,450 million was delivered in the year-ago quarter, while a loss of $922 million was recorded in the previous quarter.

Earnings Whispers

Our proven model predicts an earnings beat for General Electric this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case with General Electric as you will see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: General Electric has an Earnings ESP of +46.67%. The Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 4 cents and 8 cents, respectively.

General Electric Company Price, Consensus and EPS Surprise

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

General Electric Company price-consensus-eps-surprise-chart | General Electric Company Quote

Zacks Rank: General Electric currently carries a Zacks Rank #3.

Other Stocks That Warrant a Look

Here are some other companies that you may want to consider as according to our model, these too have the right combination of elements to beat on earnings this season:

3M Company MMM presently has an Earnings ESP of +0.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ITT Inc. ITT currently has an Earnings ESP of +2.28% and a Zacks Rank #2.

Fortune Brands Home Security, Inc. FBHS presently has an Earnings ESP of +2.97% and a Zacks Rank of 2.

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