General Electric Company GE is set to report its fourth-quarter 2023 results on Jan 23, before the market opens.
The Zacks Consensus Estimate for the company’s fourth-quarter earnings has decreased by a penny in the past 60 days. However, the company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, with the average beat being 53.4%.
Let’s see how things are shaping up for General Electric this earnings season.
Factors Influencing Q4 Earnings
Robust commercial aerospace, significant growth in LEAP engine deliveries, growth in demand for commercial engines and services are expected to have boosted GE’s Aerospace segment in the fourth quarter of 2023. An increase in defense engine orders is also likely to aid its results. For the fourth quarter, the Zacks Consensus Estimate for the segment’s revenues is pegged at $8,528 million, indicating a 12% increase from the year-ago reported figure.
GE’s Renewables segment has been reaping the benefits from higher equipment demand in the Grid business, driven by strong European demand for High Voltage Direct Current solutions. Also, the strength in the Onshore Wind business in North America augurs well. The consensus mark for the segment’s fourth-quarter revenues is $3,705 million, implying an 8.6% increase from the year-ago reported number.
Solid momentum in heavy-duty gas turbines and aero derivatives is likely to have driven the performance of GE’s Power segment in the fourth quarter. However, the reduction in Steam Power equipment owing to the ongoing exit of newly built coal is likely to have adversely affected the segment in the to-be-reported segment. The consensus mark for the segment’s fourth-quarter revenues is pegged at $4,863 million, indicating a 3.3% decline from the year-ago reported number.
The acquisition of Nexus Controls (April 2023), which allows the creation of a single, full-service controls business line for further development of GE’s proprietary Mark Vle controls systems platform, is likely to have supported the company’s performance in the fourth quarter.
However, raw material cost inflation, especially in the defense market, is likely to have dented GE’s bottom line in the to-be-reported quarter. Also, given the company’s extensive presence, forex woes are expected to have hurt GE’s performance in the to-be-reported quarter. The Zacks Consensus Estimate for GE’s fourth-quarter 2023 revenues is pegged at $17,767 million. Although the figure indicates an 18.5% decline from the year-ago reported number, it implies sequential growth of 7.5%.
Anticipating Q4 Earnings
Our proven model suggests an earnings beat for GE 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, which is the case here.
Earnings ESP: GE has an Earnings ESP of +0.31% as the Most Accurate Estimate is pegged at 91 cents, which is higher than the Zacks Consensus Estimate of 90 cents.
Zacks Rank: GE carries a Zacks Rank of 2.
Highlights of Q3 Earnings
General Electric reported third-quarter 2023 adjusted earnings of 82 cents per share, which beat the Zacks Consensus Estimate of earnings of 56 cents per share. The bottom line increased 134.3% year over year. Total revenues of $17,346 million beat the consensus estimate of $15,675 million. The top line increased 19.9% year over year.
Other Stocks to Consider
Here are some other companies from the same industry, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
ITT Inc. ITT has an Earnings ESP of + 0.75% and a Zacks Rank of 2.
Danaher Corporation DHR has an Earnings ESP of +0.19% and a Zacks Rank of 3.
3M Company MMM has an Earnings ESP of + 2.41% and a Zacks Rank of 3.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
