Wall Street will be watching Friday, when the company General electric (US:GE) reports. Industrial giant, who claimed the world’s largest market capitalization recently as the early 2000s, is now fighting for its survival. Analysts pay attention to the income and profit, but GE stock rates in relation to peers such as Honeywell international Inc. (NYSE:hon) and 3M with (Ticker NYSE:MMM) will not be a priority.
Greater attention will attract during its restructuring, as well as news on the measures taken or to be taken.
Wall Street expects a decline in the General electric earnings
Analysts expect that General electric first-quarter profit of 2018 to come in at 11 cents a share. This is compared to 21 cents per share in the same quarter last year. They also forecast revenue for the quarter will be released at the level of 27.52 billion. That would represent a modest decline from 27.66 income recorded in the first quarter of last year a billion dollars.
Another critical number is the overall guidance of the Electric earnings. In November, the company announced that it expects to earn between $1.00 and 1.07 $per share in 2018. Analysts have conducted estimates consensus of 96 cents a share. This indicates that expectations run high for some level of revision downward.
Total electric revenues were below estimates in the last two quarters. John Flannery assumed the position of CEO of Jeffrey Immelt on Aug. 1. Therefore, this report will serve as the second report, where Flannery worked on the block.
Since Flannery took over, he works for the solution of GE on the major issues of balance. Although earnings beat would fix some problems, investors are likely to be elsewhere.
The sale of assets and cash flows remain in focus
One direction will probably make progress on plans to sell assets worth $ 20 billion. These assets include the light bulb business, symbol GE, and one that the company held with Thomas Edison founded GE in 1892.
Many also expect the parallel transport division, which the company also owns for over a century. The division sales of approximately $ 7 billion for the company.
Netting of cash remains a priority for the GE. In the fourth quarter of 2017 saw a net change in cash in the amount of $ 3.7 billion. This marks a significant improvement from Q4 2016, when the cash balance declined by nearly $5.9 billion Will be whether the company can achieve positive cash flow for the 1st quarter of 2018 remains unclear.
However, cash flow has contributed to the recent decline in dividends, which will reduce quarterly cash costs of $ 1.1 billion for the quarter. While investors see the improvement of the outflow was seen in 1-m quarter of last year to about $ 7.2 billion, I doubt that this figure will signal to investors.
Investors want to avoid “surprises”
Most investors should look for further surprises, and that is connected to the rest of GE capital and pensions. In January, the GOE showed an unexpected shortfall of $ 15 billion in long-term care insurance.
It was also revealed that in January was the actual value of pension liabilities, then estimated at $ 31 billion. Since then, came to $ 2.4 billion. Still he remains the biggest pension deficit in corporate America.
Lockheed Martin Corporation (Ticker NYSE:lmt With) and Boeing (Ticker NYSE:BA) second-and third-largest deficit. Their aggregate liability stands at 33.3 billion, only $4.6 billion more than the deficit of the GE entities independently.
Naturally, this gave rise to fears about what other surprises remain in the company. However, if the income report addresses progress in the past surprises, not new revelations, it should help to restore confidence in the stock GE.
Final thoughts on GE stock earnings
General Electric earnings will weigh on the minds of investors in the forthcoming report on Friday. Still further surprises remain the biggest danger. Analysts had expected 11 cents a share in GE revenues for the first quarter. That would represent a large drop from the first quarter of 2017. However, this news can hardly be assessed in the action.
Investors are likely to focus on the progress made in the restructuring plans of the company. They will also be looking for improvement in cash flow, and progress in addressing “surprises” from earlier this year.
The GOE faces major challenges as it works to restructure the company and strengthen its balance sheet. However, if the company can show progress and to avoid surprises, GE stock may soon come to buy.
At the time of this writing, will Healy not to take a position in any of the above actions.