GE Earnings Probably Fell for First Time in Five Quarters

Focus on GE aviation revenue

Key Takeaways

  • Analysts estimate adjusted EPS of $0.47 vs. $0.57 in Q3 FY 2021.
  • Aviation revenue is expected to grow at the second-fastest place in at least four years.
  • Aviation will be GE's sole business by 2024 after the conglomerate spins off healthcare, power, renewable energy and other units.

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

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

GE's reach once extended across light bulbs, appliances, financial services, and broadcast television. As its financial performance lagged, a revolving door of chief executive officers has sold all or part of many of those businesses, seeking to reignite 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 one business, aviation.

That unit is closely tied to the the airline industry, which is rebounding from COVID-era slowdowns. Analysts expect its revenue climbed at the second-fastest rate in 16 quarters in the three-month period.

GE shares are down 32% over the past year, compared with an 18% drop in the S&P 500 Index.

One Year Total Return for S&P 500 and GE
Source: TradingView.

GE Earnings History

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

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

GE Key Stats
  Estimate for Q3 FY 2022 Q3 FY 2021 Q3 FY 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: Visible Alpha

The Key Metric

GE's aviation business has staged a recovery even as supply chain bottlenecks have hurt parts deliveries and delayed the delivery of jet engines. After five straight quarters of declines during the pandemic, revenue 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 this year's second quarter, the best performance in four years.

Article Sources
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  1. Bloomberg. "GE Falls After CFO Warns Supply-Chain Woes Weighing on Profit."

  2. Fortune. "Fortune 500: General Electric."

  3. Visible Alpha. "Financial Data."

  4. General Electric Co. "Upcoming Events & Presentations."

  5. Business Insider. "A look back at General Electric's 129-year journey from American manufacturing icon to fallen giant."

  6. GE. "GE Plans to Form Three Public Companies," Page 1.

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