GE Q3 2021 Earnings Report Recap

GE beat on earnings but missed on revenue

Key Takeaways

  • GE aviation segment revenue fell short of analyst predictions.
  • GE's aviation business is dependent on the airline industry, which was heavily affected by the COVID-19 pandemic.
  • GE raised its 2021 adjusted EPS expectations and narrowed its full-year free cash flow outlook.
GE Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted Earnings Per Share Beat $0.57 $0.48
Revenue (B) Miss $18.4 $19.3
Aviation Segment Revenue (B) Miss $5.4 $5.6

GE (GE) Financial Results: Analysis

General Electric Company (GE) reported earnings for Q3 FY 2021 that were mixed relative to analyst predictions. The company surpassed consensus estimates for adjusted earnings per share (EPS), reporting $0.57 as opposed to a predicted $0.48. On the other hand, total revenues declined by roughly 1% year over year (YOY) and came up short of expectations.

Together, these data points suggest that GE's recovery following the COVID-19 pandemic remains in progress, as the company still has ground to cover to return to pre-pandemic business levels. It is important to note that GE went through a 1:8 reverse stock split in August 2021. All of our adjusted EPS figures in this story reflect adjustments made to include the current share count.

GE's Aviation Segment Revenue

A key metric for investors is GE's aviation segment revenue. The company's aviation segment designs and manufactures aircraft engines, components, power, and other systems for both commercial and military applications. GE's aviation business is dependent on the airline and aviation industries, both of which are highly recovery dependent.

GE aviation segment revenue for Q3 FY 2021 of $5.4 billion came in below analyst predictions. While this constitutes roughly 10% YOY improvement, it is still well below pre-pandemic levels, suggesting that recovery remains ongoing.

GE's Outlook and Stock Performance

GE raised its FY 2021 guidance for both adjusted EPS and industrial free cash flow. Adjusted EPS is now expected to be between $1.80 and $2.10, while prior to this report it was anticipated to be within the range of $1.20 to $2.00. Industrial free cash flow is now expected to be between $3.75 and $4.75 billion. However, the company reduced its industrial organic revenue guidance. GE now predicts flat industrial organic revenue, whereas before it expected low-single-digit growth in this area.

GE shares were up about 1.5% in pre-market trading following the earnings release. The company's stock has significantly outperformed the broader market, providing one-year trailing total returns of 78.9% as compared with 34.3% for the S&P 500.

Article Sources
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