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Dismal 2Q17 Results Drag General Electric into Murky Waters

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Dismal 2Q17 Results Drag General Electric into Murky Waters PART 1 OF 10

General Electric Stock Tumbles on Its 2Q17 Results

GE’s 2Q17 earnings

US industrial conglomerate General Electric (GE) declared its 2Q17 results on July 21, 2017. GE managed to surpass Reuters-surveyed analysts’ consensus adjusted earnings per share (or EPS) estimate of $0.24 per share in the quarter. It reported adjusted EPS of $0.28.

On a YoY (year-over-year) basis, General Electric’s 2Q17 GAAP (generally accepted accounting principles) EPS of $0.14 fell 53.3% from $0.30 in 2Q16.

General Electric Stock Tumbles on Its 2Q17 Results

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In 2Q17, General Electric’s industrial plus vertical operating EPS were $0.28, a fall of 45%, compared to $0.41 in 2Q16. The company’s operating EPS were $0.19, a fall of 51.3% YoY, compared to $0.39 in 2Q16.

Stock price reaction

In June 2017, General Electric announced a change in its management. It said that CEO Jeffrey Immelt would step down effective July 31, 2017, handing over the reins to John Flannery.

Immediately following its earnings announcement, GE stock tanked 2.9% on July 21, compared to its previous day’s close of $26.7. On July 24, the stock settled near $25.5. Let’s take a look at its peers’ stock price changes on July 21:

  • Illinois Tool Works (ITW) rose marginally.
  • 3M Company (MMM) fell 0.6%.
  • United Technologies (UTX) rose ~1%.
  • Honeywell International (HON) rose ~1%.

On the same day, the SPDR S&P 500 ETF (SPY), which tracks the broader market, fell 0.1%. The market is full of speculation about General Electric’s being divided into smaller pieces. 

GE’s management painted a dim picture of the remainder of 2017 in its 2Q17 earnings conference call. Following the change of guard, it’ll be interesting to see how Flannery guides the company through 2H17.

In this series

In this post-earnings series for GE’s 2Q17, we’ll assess the performances of the company’s major segments. We’ll also look into the company’s margins, which showed almost no improvement in the quarter. We’ll finish up by looking at Wall Street analysts’ recommendations for General Electric and its peers following GE’s 2Q17 results.

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