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Inside Wall Street’s 4Q17 Revenue Estimates for General Electric

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Analysts’ 4Q17 revenue estimates for GE

General Electric’s (GE) top-line growth has been a concern, as reflected in its 3Q17 earnings. Its Healthcare, Aviation, and Renewable segments have been bright spots for GE’s revenues. 

On the other hand, GE’s Power segment is expected to further subdue its revenues. The fate of GE Transportation is tied to North American rail traffic growth. Baker Hughes, a GE Company (BHGE) is expected to post improved 4Q17 results amid rising oil prices due to the hurricanes and production cuts.

For 4Q17, analysts surveyed by Thomson Reuters expect GE to report revenues of $34.0 billion. In 4Q16, the company’s revenues totaled $33.1 billion. As a result, analysts expect a 2.8% increase in GE’s 4Q17 revenues. 

Analysts expect General Electric to achieve revenues of $125.8 billion in 2018, which reflects 1.3% growth year-over-year.

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Could GE post higher revenues in 4Q17?

General Electric’s (GE) turnaround story depends on revenue growth in key segments. Its Healthcare segment was previously headed by its current CEO, John Flannery. Flannery transformed the division into one of the company’s best-performing verticals. 

The company’s initiative to grow its ultrasound business within the Healthcare division is evidenced by the levels of investment in that area. Ultrasound technologies are used to assist treatment in multiple areas such as cardiac and vein dysfunction. The use of ultrasound technologies during surgery and other medical procedures has significantly reduced treatment and diagnosis costs.

Oil prices and production

The oil industry scenario is improving, as Brent crude touched $70.30 on January 15, 2018—the highest level in the last three years. US WTI (West Texas Intermediate) prices hit a three-year high, reaching $64.90 on the same day. 

Oil prices were driven up by OPEC nations’ and Russia’s oil production curbs as well as worldwide economic growth. The increased oil prices could partially support GE’s Power business’s fundamentals in the coming quarters. 

In addition, President Trump’s decision to open up US offshore areas to oil and natural gas drilling could improve BHGE’s prospects.

Peers’ 4Q17 revenue estimates

Let’s take a look at the estimated revenue growth of GE’s industrial (IYJ) peers. Analysts polled by Thomson Reuters estimate 3M (MMM) to report revenue growth of 7.0% in 4Q17. 

As another solid performer in the industrial space, Honeywell International’s (HON) revenues are expected to rise 7.7% in 4Q17. United Technologies (UTX) is expected to post a 4.5% increase in its 4Q17 revenues. Revenues for Illinois Tool Works (ITW) are expected to increase 4.3% for the fourth quarter of 2017.

In the next part, we’ll look analysts’ projections for GE’s 4Q17 operating margins.

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