GE stock is up about 2% year to date.
Mike Simons/Getty Images
General Electric will report earnings Tuesday morning for the first time since CEO Larry Culp announced plans to break the company in three parts.
Investors and analysts have a lot to watch out for, including an update about the spinoffs as well as fourth-quarter earnings and, more important, guidance for 2022. All that will be happening while General Electric (ticker: GE) moves to a new reporting format without separate numbers for GE’s finance arm: GE Capital.
For the fourth quarter, Wall Street is projecting about 84 cents in per-share earnings from $21.4 billion in sales. A year ago, GE earned about 57 cents from $21.9 billion in fourth-quarter 2020 sales.
For the full year, including the first three quarters of 2021, GE is expected to report about $2 in per-share earnings from $74.8 billion in sales.
Looking ahead, Wall Street expects about $4 in per-share earnings from $79.6 billion in sales for 2022. Those will be two numbers investors can use to compare GE’s guidance to.
As for GE’s business segments, Power and Renewables sales are expected to grow slightly, hitting about $33.7 billion in 2022. Aviation sales are expected to rebound, growing to $25.9 billion in 2022, up from a projected $22 billion in 2021. And GE Healthcare sales are expected to be about $18.5 billion in 2022, up from about $17.9 billion.
Power, Aviation, and Healthcare are the three businesses GE is breaking apart between now and 2024. GE Capital is no longer a stand-alone business unit and is being, essentially, absorbed by the other business units.
That will change the way GE reporting looks. In the third quarter of 2021, GE reported $469 million in earnings for GE Capital. Management will likely give some breakdown of where earnings from Capital have gone, but investors shouldn’t expect a separate line for GE Capital performance.
Changing reporting styles, along with the business transformation, seem to have investors on edge. The stock looks to be more volatile after earnings will be reported. Options markets imply the stock will move roughly 5%, up or down, after earnings. The stock has only moved about 2%, up or down, on average after the past four quarterly earnings reports.
After earnings are released, GE management will host a conference call at 8 a.m. Eastern time to discuss results. Along with transformation and earnings guidance, investors will also want to hear about inflation and Covid-19. Pandemic commentary isn’t likely to be all that different from what investors hear daily. Regarding inflation, GE has been able to offset higher costs with higher prices in 2021. Investors will want the same in 2022.
Coming into the week, GE stock is up about 2% year to date. That is better than the overall market. The S&P 500 and Dow Jones Industrial Average are down about 8% and 6%, respectively.
Write to Al Root at [email protected]
