General Electric Co (NYSE: GE) is scheduled to release its most recent quarterly results before the markets open on Friday. The consensus estimates from Thomson Reuters call for $0.12 in EPS on $27.52 billion in revenue. The first quarter of last year reportedly had $0.21 in EPS on $27.66 billion in revenue.
In a Stifel research report out earlier this month, analyst Robert McCarthy lowered first-quarter earnings estimates to $0.11 per share from $0.12 and also lowered full-year earnings to $0.95 per share from $0.98 (the consensus stands at $0.97). Additionally, 2019 full-year earnings are chopped to $1.05 (which is in line with the consensus figure) from $1.10.
The analysts model free cash flow at what is considered a “charitable” $0.86, much of which will be consumed by the company’s $0.48 dividend. Many on Wall Street feel it could be cut in half again or, in the more draconian models, eliminated entirely. Lastly, the firm’s price target on the stock is slashed to $13 from $15, while keeping a rating of Hold on the shares. The report noted this:
This earnings-per-share reduction is driven by continued challenges at Power, coupled with the expectation for slower overall growth across long cycle businesses and price/cost material inflation challenges. Our target price is lowered to $13 (~12.5X our $1.05; would equate to around 6.5% FCF yield or ~15X 2019 free cash flow). GE has taken great pains recently to “virtue signal” a change in the management and accountability culture at the company. This has included a change in management compensation, appointments to the Board signaling a laser-like focus on capital allocation (Danaher CEO Larry Culp) and transparency (Leslie Seidman, Former Chairman, FASB). Such actions have tried to highlight a change in the strategic narrative and direction of the company.
Over the past 52 weeks, GE has underperformed the broad markets, with its stock down 54%. In just 2018 alone, the stock is down roughly 22%.
A few other analysts weighed in on GE ahead of the report:
- Goldman Sachs has a Hold rating and a $14 price target.
- Merrill Lynch has a Hold rating with a $17 price target.
- JPMorgan has a Sell rating with an $11 target price.
- RBC has a Hold rating with a $15 price target.
- Citigroup has a Buy rating.
Shares of GE were last seen trading at $13.68, with a consensus analyst price target of $17.40 and a 52-week range of $12.73 to $30.54.