GE Stocks at 12 Month Low and Misses Q3 EPS Estimate

General Electric CompanyGeneral Electric Company (NYSE: GE) stocks have dipped to the 12-months low figure of $22.10 after reporting a year on year decline in Q3 earnings of the fiscal year 2017. The company has missed the estimates of the analysts by a vast margin.

General Electric has also reported low figure in the adjusted earnings outlook for the fiscal year 2017.

However, if the company increases its quarterly revenue that beats the estimates of the analysts and restructuring plans are correctly implemented, then it is sure there could be a recovery in the stock prices of General Electric.

This Massachusetts-based company has reported revenues worth $33.472 billion in Q3 2017 which is 14% growth from revenues of $29.266 billion in the same period 2016. In the quarter ending September 2017, the net earnings were $1.800 billion or $0.21 per share which has declined by 10% from net earnings of $1.994 billion or $0.22 per share in September 2016.

If we remove the restructuring charges, the non-GAAP industrial earnings and vertical earnings in Q3 2017 were $2.550 billion or $0.29 per share which declined by 11% from $2.870 billion or $0.32 per share in Q3 2016. Thomas Reuters Consensus had estimated earnings of $0.49 per share on total revenues of $32.56 billion.

General Electric

There is a 4% annual growth in the power segment revenues to $8.679 billion. There is a growth of 13% in renewable energy revenues to $2.095 billion. There is a 21$ increase in oil and gas revenue to $5.365 billion. The strong growth in revenue is primarily due to the successful merger of General Electric’s Oil and Gas Division with Baker Hughes.

There is a growth of 6% in aviation division to record revenues worth $6.82 billion while the healthcare revenues grew by 4% to $4.724 billion. There is a decline of 8% as compared to last year in the transportation segment to total revenues of $1.072 billion.

In spite of better performance in all the segments except Transportation and Lightning segment, General Electric was unable to beat the estimates of analysts and improve its overall earnings. The most significant reason was the impairment charge of $0.13 and restructuring fee of $0.03. In addition to this, there is a decrease of 220 basis points to 11.8% in the adjusted industrial margin.

General Electric is working to cut the costs. In this regard, the company has saved $500 million in manufacturing costs during the 3rd quarter. Till now, there is a cost-cutting of $1.2 billion by GE. The company has set a goal of $1 billion in overall cost-cutting for the year 2017 and 2018. The figures were revealed by John Flannery who is the new CEO of General Electric. He further said that the company is looking forward to divesting $20 billion of non-core assets in the next couple of years.

The CEO of GE has lowered the fiscal 2017 cash and earnings per share outlook based on the headwinds faced by the company and the divestment process. The company is looking forward to a cash flow operating activities of $7 billion. The outlook has been minimised due to the poor performance in the Power division which is involved in the manufacturing of power plants turbines.

The company has also curtailed the adjusted 2017 earnings per share outlook between $1.05-$1.10 from earlier outlook share of $1.60 and $1.70. The Street Consensus is at $1.53 per share at the moment. The FY17 core EPS View had been trimmed between $1.05-$1.10 per share from the earlier figure of $1.60 to $1.70 issues three months ago.

The forward PE ratio of General Electric is at 13.6 currently, and it would undoubtedly attract the attention of valued investors due to the $328 billion backlog at the end of September 2017 and growth in revenue across all the segments. Hence, the stocks of General Electric are likely to improve shortly.

General Electric Stock Price Oct 25th 2017

General Electric Stock Price Oct 25th, 2017

The stock of GE is showing strong support level at 21.50. At the same time, the stock is positioned entirely away from 50 periods linear weighted moving average. Further, the Stochastic Indicator is in the oversold region. Hence we may easily forecast a recovery in the stock price of General Electric for a short-term period.

Traders are advised to invest in a call option from any reputed binary options broker in the industry. One should invest when the stock is trading around $22 in New York Stock Exchange and select trade expiry period of November 2, 2017.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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