On Friday morning, we’ll see earnings out of General Electric Co. (NYSE: GE). The largest conglomerate’s estimates from First Call are $0.51 EPS on more than $43.6 Billion in revenues. GE does give guidance for one quarter and even for a year, so the estimates for Q2 are $0.58 EPS on $47.68 Billion revenues and fiscal 2008 estimates are $2.43 EPS on just over $192 Billion.
One issue we’d note is the recent insider buying seen from CEO Jeff Immelt. The company also just last gave its annual shareholder address just under one month ago, and the company noted that GE should hit its annual targets in 2008 with 10% revenue growth to $195 Billion on EPS growth of 10% and an average return on capital should be near GE’s target of 20%.
Analysts have an average target price of roughly $42.00. based on today’s options pricing, it appears that options traders are expecting a move in either direction of less than $0.80 in either direction. The 3-closest options contracts have an open interest in the April Call options of more than 84,000 contracts and the 3-closest put options have an open interest of only around 36,000 contracts. GE’s chart is sort of in the middle of a key area right now. Shares are trading north of the $34.98 level of its 50-day moving average, and are trading under the 200-day moving average of $37.19.
In this climate, it probably isn’t fair for Wall Street to demand "raised guidance" out of a conglomerate. As long as there are no major changes to prior guidance, shares should hang in there just fine. If there have been any further erosions in the last month that Wall Street hasn’t seen elsewhere, that wouldn’t weigh too well against that 15% gain GE shares have seen from the lows in March.
As goes GE, so goes the economy. That being said, we’d direct you to the analysis of the Business Roundtable’s latest results. GE and Jeff Immelt are members of this group.
Jon C. Ogg
April 10, 2008