GE to report 1Q results: What’s in store for the Dow laggard?
General Electric will release its latest quarterly results on Friday, and investors will be eager to learn if the industrial conglomerate has made progress in turning itself around or if it will be more of the same “wait and see.”
Analysts expect adjusted earnings of 11 cents per share, down 46% year-over-year, on revenue of $27.45 billion, according to Thomson Reuters.
As of Thursday, GE shares were down almost 21% year-to-date, making it the worst performer among the 30 stocks in the Dow Jones Industrial Average.
On Friday, investors will look for new information on a range of issues, including a potential cut to the company's 2018 profit guidance and the status of its $20 billion asset sale.
GE recast some of its financials in an 8-K filing with the SEC, reducing its earnings for the past two years by 30 cents a share. The adjustment was expected after the company announced earlier in the year that it would have to make changes to comply with new accounting standards.
Commenting on GE’s restatements, Melius Research said that while such changes are common among companies, the magnitude of GE’s was a little alarming.
As GE is scheduled to report, Melius said the company needs some sort of breakup. “Conglomerates that can’t drive best-in-class returns and cash in their businesses have not earned the right to hold on to those assets,” Melius analysts said in a report.
At the same time, Melius noted some positives in the company’s 8-K, including the company’s move to more conservative, simple accounting. Melius also added that GE could have cut its guidance when it filed its 8-K but did not, leaving a glimmer of hope that it will maintain guidance when it reports Friday.
GE's most recent 2018 profit guidance has been for earnings per share of $1 to $1.07. Chief Financial Officer Jamie Miller said in February that profits were tracking toward the "lower half" of that band.
Goldman Sachs analyst Joe Ritchie recently wrote that the impact of the accounting changes "coupled with a weak core business mean that a cut to GE's $1.00-$1.07 EPS guide is almost a certainty and could potentially happen as early as 1Q earnings."
GE will release its first-quarter results before the opening of the market on Friday. Executives will participate in a conference call at 8:30 a.m. ET.