GE’s profits likely fell for the first time in five quarters

Key points to remember

  • Analysts estimate adjusted EPS at $0.47 versus $0.57 in Q3 2021.
  • Aviation revenues are expected to grow second in at least four years.
  • Aviation will be GE’s sole business by 2024 after the conglomerate separates healthcare, power, renewables and other units.

General Electric Co. (GE), the once-dominant industrial company that has been selling units in recent years to stay afloat, will likely report declining profits and flat revenue in the third quarter due to bottlenecks in the supply chain, falling demand and squeezed margins.

GE is likely to say adjusted earnings per share (EPS) excluding certain items fell 18.3% year-on-year to $0.47, the first drop in profit in five quarters, while revenue was flat at $18.4 billion, according to an average estimate from Visible Alpha. GE announces third quarter 2022 results before market open on October 25.

GE’s reach once extended to light bulbs, appliances, financial services and television. As its financial performance lagged, a revolving door of CEOs sold all or parts of many of these companies, seeking to revive growth. In 2021, GE signaled the end of one of America’s oldest conglomerates with plans to spin off its healthcare, renewable energy, power and digital businesses in 2023 and 2024. That leaves GE with just one business, aviation.

This unit is closely tied to the airline industry, which is rebounding from COVID-era downturns. Analysts expect its revenue to have grown at the second-fastest pace in 16 quarters during the three-month period.

GE shares have fallen 32% in the past year, compared to an 18% drop in the S&P 500 index.

Source: Trading View.

GE Earnings History

GE has reported declining profits in three of the past five years. After a string of quarterly declines or losses, GE posted four straight quarters of profit increases in the second quarter of this year.

Revenue growth has suffered amid GE’s restructuring, with annual revenue declining for five consecutive years through 2021. Revenue rebounded in the second quarter of 2022, the first increase in nearly three years.

GE Key Statistics
Estimate for the third quarter of fiscal 2022 Q3 2021 Q3 2020
Adjusted earnings per share ($) 0.47 0.57 0.38
Revenue ($B) 18.4 18.4 19.4
Aviation revenue ($B) 6.6 5.4 4.9

Source: VisibleAlpha

The key metric

GE’s aerospace business has rebounded even as supply chain bottlenecks have hurt parts deliveries and delayed delivery of jet engines. After five consecutive quarters of decline during the pandemic, revenues began to rebound in the second quarter of last year. Since then, GE has posted four more quarters of revenue increases, including a 26.6% jump in the second quarter of this year, the best performance in four years.

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