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Should We Expect General Electric to Deliver in 1Q17?

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Should We Expect General Electric to Deliver in 1Q17? PART 1 OF 6

How Did General Electric Trend in 1Q17?

General Electric’s 1Q17 earnings

Iconic industrial mammoth General Electric (GE) will release its 1Q17 earnings on April 21, 2017. Affected by the 2009 financial crisis, General Electric decided on a complete business makeover three years ago. However, the company’s systematic efforts to move away from its non-core verticals hasn’t yet borne fruit.

Global industrial activity (SPY) hasn’t been impressive so far, affecting General Electric’s earnings growth in recent quarters. GE’s overall orderbook position doesn’t seem very promising. The stock’s performance so far in 1Q17 tells the same story. Let’s take a look.

How Did General Electric Trend in 1Q17?

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GE’s stock performance

Looking at above graph, we can see that General Electric has underperformed compared to its peers since the beginning of 2017. The stock has delivered a return of ~-6% YTD (year-to-date) as of April 12, 2017.

However, all of its peers have delivered positive returns. United Technologies (UTX) has returned 2.4% since January 1, 2017. 3M Company (MMM) has delivered 6.2%. GE’s smaller peer Illinois Tool Works (ITW) has returned 6.9%, and Honeywell International (HON) has delivered 6.3% to investors.

Management’s views on 2017

According to Jeff Immelt, GE’s CEO, “In 2017, we expect restructuring to be about $2.5 billion funded by the Water and Industrial Solutions dispositions with the heaviest spend in the first half of the year. For the first quarter, we are estimating restructuring spend of about $1.0 billion with no offsetting gains. For the full year, as we said, we expect gains to equal restructuring but there will be variability by quarter.”

In this pre-earnings series, we’ll focus whether General Electric will meet analysts’ revenue and earnings targets. In the end, we’ll review analysts’ recommendations for GE and its peers.

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