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Why General Electric Might Not Meet Analyst Estimates in 3Q17

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Part 2
Why General Electric Might Not Meet Analyst Estimates in 3Q17 PART 2 OF 6

Will General Electric Meet Analysts’ Revenue Estimates in 3Q17?

GE: Analysts’ 3Q17 revenue estimates

Top-line growth matters for any company, and it matters a lot for General Electric (GE). The mean 3Q17 revenue forecast from analysts polled by Thomson Reuter is $32.5 billion for the company. Compared with last year’s revenue of $29.2 billion, their estimate represents 11.3% growth YoY (year-over-year)—but is this realistic?

For fiscal 2017, General Electric’s revenue guidance remains in the $127.4 billion–$129.8 billion range.

Will General Electric Meet Analysts’ Revenue Estimates in 3Q17?

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Notably, in the last eight quarters, the company was able to beat analysts’ projections only three times. Remember that the company’s Industrial vertical’s revenue fell 12% year-over-year in the second quarter of 2017. The causes of this gross revenue underperformance remain active. The oil and gas scenario hasn’t improved so far. Though Hurricanes played a part in the crude oil price surge, the issues seem more structural. Plus, lower demand for locomotives has also hit GE’s transportation segment.

Peer group revenue estimates in 3Q17

Thomson Reuters–surveyed analysts expect 3M (MMM) to post 2.8% higher revenue in 3Q17. The company is estimated to report revenue of $7.9 billion in that quarter.

Another industrial major, Honeywell International (HON), is projected to report revenue of $10.0 billion, an estimated rise of 2.1% YoY. United Technologies (UTX) is anticipated to report $14.9 billion in revenue in the third quarter of 2017, which indicates a forecasted growth of 3% compared to 3Q16.

Segmental revenue expectations

If oil (UGAZ) prices continue their upward journey, they should boost the newly formed Baker Hughes, a GE Company (BHGE). Plus, GE Power’s renewable energy portfolio has kept on shining in recent years. The company’s foray into emerging markets in the wind and other renewable energy space should boost revenues. In the recent quarter, General Electric’s Healthcare segment remained a top performer. Strong orders from emerging economies should support the revenue growth in that vertical.

Next, we’ll review analysts’ estimates for GE’s operating margins in 3Q17.

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