GE Third-Quarter Profit Misses Estimates By Wide Margin

Revenue and aviation segment beat expectations

Key Takeaways

  • GE's aviation revenue came in above analysts' expectations.
  • Aviation will be GE's sole business by 2024 after the conglomerate spins off healthcare, power, renewable energy and other units.
  • Adjusted EPS came in below predictions.
GE Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted Earnings Per Share Miss $0.35 $0.47
Revenue Beat $19.1B $18.4B
Aviation Revenue Beat $6.7B $6.6B

Source: Predictions based on analysts' consensus from Visible Alpha

General Electric (GE) Financial Results: Analysis

General Electric Co. (GE), the once-dominant industrial company that's been selling units in recent years to stay afloat, posted third-quarter earnings well below analysts' estimates as a six-fold increase in losses in its renewable energy business offset growth in aviation.

GE's adjusted earnings per share (EPS), excluding certain items, of $0.35 missed consensus estimates by 12 cents a share. EPS was down 34% compared to the prior year quarter. Revenue climbed 3% to $19.1, higher than the $18.4 billion estimate.

GE said plans to spin off of its healthcare business—the first of several moves to break up the conglomerate—is on track for early 2023. Revenue fell due to inflation and demand challenges in onshore wind, and power dropped along with unit shipments. Renewable energy's loss widened six-fold to $934 million from $151 million.

GE Aviation Revenue

GE's aviation business, GE Aerospace, beat estimates, climbing 24% to $6.7 billion. It will be GE's core focus following the spinoffs and has recovered along with the broader airline industry after the COVID-related slowdown. GE said its aerospace commercial services grew on shop visit growth, spare part sales, and favorable prices, while commercial engine shipments increased as well.

GE Outlook and Stock Performance

GE maintained its full-year outlook for 2022 with high-single-digit growth for organic revenue and adjusted EPS of between $2.40 and $2.80 as a result of renewable energy warranty and related reserves. Aerospace is expected to have top-line growth of over 20% on improvement in services and momentum in performance.

GE shares were mostly unchanged following the report, dropping by under 1% as of 7:13 a.m. New York time. The company's stock is down 30% in the last year, compared with a drop of 17% for the S&P 500.

GE's next earnings report (for Q4 FY 2022) is expected to be released on Jan. 24, 2023.

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