General Electric reported better-than-expected Q4 earnings early Tuesday, but the conglomerate provided weak guidance heading into its conversion to a pure-play aerospace company. GE stock faded Tuesday after hitting a six-year high on Monday.
Is GE Stock A Buy? Here's What General Electric Earnings, Charts Show
GE Earnings
GE earnings fell 9% to $1.13 a share, though that topped analyst forecasts for a 28% drop to 89 cents a share. Revenue climbed 15% to $19.4 billion, defying view for a drop to $17.18 billion.
General Electric had a strong beat-and-raise earnings report for Q3 in October, driven by strength in its commercial aerospace business.
For the first quarter, GE sees earnings of 60-65 cents, below the FactSet consensus of 70 cents.
Meanwhile, GE is preparing to break out its power and renewables business as GE Vernova in early April. The remaining operations will receive the GE Aerospace title. The company's health care spinoff, GE HealthCare Technologies, debuted on the Nasdaq last January.
GE divided its guidance for the full year, anticipating the division of GE Aerospace and GE Vernova into separate companies.
For GE Vernova, management pointed to revenue of $34 billion to $35 billion. It expects high single-digit growth of adjusted earnings before interest, taxes, depreciation and amortization margins. Projections for free cash flow were between $0.7 billion to $1.1 billion.
GE Stock
General Electric pared losses to 1% Tuesday, after rising 1.2% on Monday to a six-year high. GE stock remains extended above a buy zone for a flat base after a mid-November breakout.
What GE Analysts Expected
TD Cowen in a research note last Tuesday said it expects mostly in-line results from GE. But strong Department of Defense funding and demand for Flight Management Systems (FMS) and munitions replacement could bolster defense revenues. TD Cowen lifted its price target on General Electric to $130 from $120 and maintained an outperform rating on the shares.
Elsewhere, Wells Fargo forecasts long-term margin upside for the company with a built-in catalyst from the Vernova spinout in early Q2, according to a mid-December research note. Analyst Matthew Akers expects adjusted earnings growth in the high-teens for GE excluding Vernova over the next few years, driven by double-digit organic sales. Akers also pointed to GE's "solid" management team and "clean" balance sheet, calling it an "attractive business with high aftermarket mix." Wells Fargo upgraded GE stock to overweight from equal weight and raised its price target to $144 from $115.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
