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What Investors Could Expect from General Electric in 2Q17

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Part 2
What Investors Could Expect from General Electric in 2Q17 PART 2 OF 5

Could General Electric Beat Analysts’ 2Q17 Revenue Estimate?

Analysts’ estimates

The sluggish global economic activity has impacted General Electric’s (GE) business prospects in 2017, which has been reflected in analysts’ lowered estimate for GE’s revenue. Analysts anticipate General Electric to see revenue of $29.0 billion in 2Q17, which translates to a double-digit fall of 13.3% in revenue YoY (year-over-year).

For the next four quarters, analysts expect GE to achieve revenue of $127.4 billion. Compared with the last four quarters’ $123.1 billion in revenue, this estimate reflects a projected rise of 3.3%.

Could General Electric Beat Analysts’ 2Q17 Revenue Estimate?

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Peer group estimates

Analysts anticipate The 3M Company’s (MMM) fiscal 2017 revenue to grow by 2.5% to $30.8 billion. They expect revenue to rise due to organic growth in all of the company’s segments.

However, the analysts don’t expect Honeywell’s (HON) 2017 revenue to rise one single digit. Analysts expect the company to report $39.4 billion in revenue in 2017. A performance drop in the company’s Aerospace segment and Performance Material and Technologies segment is expected to impact its revenue.

For Illinois Tool Works (ITW) and United Technologies (UTX), analysts project 3.9% and 2.9% YoY revenue growth. Illinois Tool Works and United Technologies are expected to attain revenue of $14.1 billion and $59.1 billion revenue, respectively, in fiscal 2017

Could GE’s revenue fall in 2Q17?

In its fiscal 2017 guidance, GE expected to achieve 3%–5% organic revenue growth. The first quarter results were not so good, top-line wise. Jeff Immelt remains concerned about the oil and gas market.

The company announced the completion of its oil and gas (UNG) division merger with Baker Hughes (BHI) on July 3, 2017. The combination’s stock began trading on the New York Stock Exchange as Baker Hughes, A GE Company (BHGE). For detailed coverage of the new company, read Can the BHI–GE Partnership Benefit from Global Growth? Though GE expected the deal to be accretive to earnings by $0.04 in 2018, the chances of a crude oil price recovery and productivity improvements don’t look promising in the near future.

The company’s aviation segment, its biggest revenue wise, is expected to shine with recent developments in world markets. In its June 2017 outlook, the IATA (International Air Transport Association) stated that it expects a significant rise in business and consumer confidence. This rise could result in higher demand for jet engines, which would support the economic cycle. In the next part, we’ll look at expectations for GE’s operating margins in 2Q17.

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