General Electric Co. (GE) is set to announce its fourth-quarter results on Tuesday, potentially marking its final report before the company's imminent breakup.
GE's stock has shown significant upward momentum leading up to the latest results. Following its exceptional performance in 2023, the stock has already surged by an additional 3.1% year-to-date through Monday afternoon, outperforming the S&P 500 index’s gain of 1.7%.
Notably, the stock has experienced substantial rallies on the day that the past two quarterly reports were released. These post-earnings gains were the highest since the third and fourth quarters of 2019.
Read: GE’s Stock Soars After Impressive Earnings Beat and Increased Outlook
It is important to consider that GE hasn't recorded a post-earnings gain for three consecutive quarters in over five years, according to FactSet data dating back to Q3 2018.
Interestingly, market sentiment has grown more optimistic about GE's bottom line in recent months. The FactSet consensus for adjusted earnings per share has risen to 89 cents as of Monday, up from 85 cents since the end of Q3.
The company has consistently surpassed adjusted EPS expectations in the last four quarters and in 10 out of the past 11 quarters.
Furthermore, the FactSet revenue consensus currently stands at $17.27 billion, a slight increase from $17.25 billion at the end of Q3.
GE's Strong Third-Quarter Results Driven by Aerospace Business
GE (General Electric) has reported impressive third-quarter earnings and revenue, largely influenced by the success of its aerospace division. The revenue of the GE Aerospace business has skyrocketed by over 25% compared to the same period last year. Analysts estimate that aerospace revenue for the latest quarter will reach $8.5 billion, reflecting a year-over-year growth rate of 11.6%.
Noteworthy fourth-quarter metrics to monitor include free cash flow, with analysts predicting $2.77 billion. This is a significant increase from $1.67 billion in the third quarter but a decrease from the $4.29 billion reported a year ago.
The FactSet consensus indicates a decline in power revenue to $4.89 billion, representing a 2.8% drop from the previous year. However, there is some positive news for renewable-energy revenue, which is expected to grow by 8.6% to $3.71 billion.
Due to the robust performance of GE Aerospace and the notable improvement of GE Vernova, the company has adjusted its full-year EPS guidance range from $2.10-$2.30 to $2.55-$2.65.
Looking ahead to 2024, analysts predict an adjusted EPS of $4.59, according to the current FactSet consensus.
In an effort to optimize its operations, GE plans to spin off its power and renewable-energy business into a separate entity called GE Vernova at the beginning of the second quarter. The remaining business will then be relaunched as GE Aerospace, and stocks for both companies will be listed on the New York Stock Exchange. Earlier in December 2022, GE had already separated its healthcare business as GE HealthCare Technologies Inc. (GEHC).
While the first-quarter results in late April will cover pre-breakup figures, there is a possibility that the report will be released after the separation occurs.
