General Electric early Tuesday reported above-forecast first quarterly results, in the company's first report since the spinoff of its health-care unit. GE stock has staged a strong rally into earnings. GE HealthCare Technologies reported its first quarter as an independent operation.
For General Electric, strong growth in new orders and revenue helped quell fears of demand ahead of a possible recession. Investors ware also keen on details regarding GE Aerospace and GE Vernova (power), which are coming public in early 2024, to cap the big GE breakup.
GE Earnings
Estimates: Analysts polled by FactSet expected GE earnings to crumble 27% year over year, to 14 cents. Revenue was seen dropping 18% to $13.299 billion.
Estimates exclude GE HealthCare, which is now a stand-alone company.
Results: Adjusted earnings jetted 42% higher to 27 cents per share. Revenue dropped not quite 11%, to $14.49 billion, according to FactSet.
Outlook: Wall Street sees full-year EPS of $1.98, a 24% decrease vs. 2022.
In late January, GE gave an upbeat full-year forecast for revenue, earnings and cash flow. In Tuesday's report, it maintained its projection for full-year revenue growth in the high single digits. It lifted the low-end of its adjusted EPS projection for the year to $1.70, a dome above its original low-end figure, and left the upper end of the guidance unchanged at $2 a share.
Management now estimates free cash flow between $3.6 billion and $4.2 billion, versus January's target of $3.4 billion-$4.2 billion.
GE Stock
GE stock jumped at the starting bell, briefly pushing its year-to-date gain above 55%. It then reversed to a 0.2% decline. Shares of GE stock cleared a handle buy point at 81.28 in late January.
GE Aerospace
GE's aerospace unit "delivered double-digit growth in orders, revenue, and operating profit year-over-year driven by commercial
momentum and strength in services," the company said in a statement. GE Vernova increased its renewable energy orders by 94% and revenue by 5% year-over-year organically.
General Electric is set to emerge as an aviation pure-play in early 2024. The storied conglomerate shed a series of businesses over the past several years, seeking a turnaround after a collapse in earnings and cash flow.
In aviation, General Electric supplies plane makers Boeing and Airbus with jet engines and aviation systems.
That includes supplying the Boeing 737 Max. Production of that bestselling jet is ramping up after a series of challenges. Additionally, commercial travel is recovering from the pandemic.
GE Aerospace also supplies the military. It expects the defense business to drive significant profit growth in 2023.
GEHC Earnings
GH Healthcare " saw strong revenue growth across all of our business segments and regions as supply chain challenges eased," according to a statement from CEO Peter Arduini. Price and productivity had a positive impact on margin performance.
Analysts projected earnings at 79 cents per share, down almost 22%, and an almost 7% revenue gain, to $4.63 billion. For the year, analysts were forecasting a 19.6% drop in earnings. Revenue was targeted at $19.2 billion, up 4.9% — below the low end of company guidance of 5% to 7% growth.
Earnings came in at 85 cents a share, with revenue at $4.7 billion. For the year, management maintained its guidance for 5% to 7% revenue growth. It pointed EBITDA (earnings before interest, taxes, depreciation and amortization) margins expectations to between 15% and 15.5%, a 50 to 100 basis-point year-over-year expansion.
Guidance for adjusted earnings also remained unchanged, targeting a range of $3.60 to $3.75, up 7% to 11%.
GEHC Stock
GEHC stock dived more than 7% in Tuesday's early action. Shares have also spent the year ripping to new highs. GEHC stock was up 50% this year through Monday. Shares have not paused to form a proper base to allow investors an entry. A three-week pause after its December launch may have been considered a brief IPO base, and Tuesday's pullback could be the beginning of a possible consolidation.
