Preview of GE's Q1 Earnings: Can Business Match This Year's Strong Stock Performance?
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Shares of General Electric (NYSE: GE) are trading higher ahead of the companies first quarter earnings release, expected out before the market opens on Friday, April 16, 2010. The stock is up 0.6% to $19.46 in mid-afternoon trading today.
General Electric has seen some price movement through the quarter; shares rose 19.6%. Much of the increase came in the last month, as the stock surged from $15.90 to $18.20, a possible signal of confidence by investors. Shares are currently up 28.4% YTD. By comparison, the S&P 500 is up 8.4% since the beginning of 2010.
The company is expected to report EPS of $0.16 for the quarter, on revs of $37.10 billion. Last quarter, the company reported better-than-expected EPS of $0.28 on sales of $41.4 billion. EPS from the same quarter last year came in at $0.26 and revs came in at $38.41 billion.
Data from Bloomberg shows that 8 of analysts have a Buy rating, 9 have a Hold, and none recommend selling the stock. The analyst consensus price target is $19.85, with a high of $22.00, and an low of $17.50.
News Through the Quarter
In early January, GE Healthcare and Intel (NASDAQ: INTC) announced that they would be expanding their sales and marketing agreement to include the U.K. for the Intel Health Guide.
News that the U.S. FDA is going to become more stringent on radiation exposure stemming from certain medical imaging procedures might put an additional cost on GE that it hadn't seen before in order to update their CT scanners, nuclear medicine studies, and fluoroscopic imaging devices.
In February, GE signed a $200 million contract with the Kurdistan Region of Iraq to supply power generation equipment to two independent power plant projects.
CEO Jeff Immelt announced that he would decline his annual bonus for the second year in a row.
Finally, at the end of March, GE announced that they have paid $150 million to acquire a liquefied natural gas receiving terminal under construction in Mississippi that will increase natural gas supplies to the Northeast and Southeast United States.
Analyst Ratings Through the Quarter
J.P. Morgan put out a report in January that had investors snapping up shares of GE. The firm set a price target of $22 on GE, at that time a "Street high" price. Click here for more color from J.P. Morgan on the call.
Post-Q409, Goldman Sachs raised their price target on GE to $21, and reiterated their Buy rating. They also see continued momentum in the shares.
Late January saw Oppenheimer raise their price target on the company to $20 from $18, and maintained their Outperform rating Click here for more color from Oppenheimer.
Sterne Agee upgraded the stock from Sell to Neutral.
Bernstein also raised their price target on the company from $19 to $20, a 5.2% increase, while maintaining an Outperform rating on the stock.
Deutsche Bank is also raising their price target on GE to $20 ahead of the Q110 earnings release, maintaining their Hold rating on the shares. The firm notes that they see a sharp increase in GE Capital Services profit recovery in FY11/FY12. Some risks that they note are foreign exchange fluctuations, LIBOR rates, late-cycle order volatility, and raw material inflation.
Summary
General Electric recently noted that one of their first priorities is to increase the dividend which was slashed by about $0.68 throughout the course of the recession. Indeed, no small feat considering that the company is also aiming to buy the large preferred stake that Warren Buffett owns. These goals should be attainable, however, as GE is expected to end FY10 with about $25 billion in cash on the books. No large acquisitions are expected for FY10, although the potential for some smaller ones here and there is still floating around.
An area that investors should be paying attention to is in the service sector. Much of recently-renewed investor confidence comes from service revenue being able to bolster an ever challenging Capital segment. Additionally, CFO Keith Sherin recently commented that their long-term service agreement backlog is reaching $129 billion.
Based on historic data, General Electric is expected to release their Q1 results at approximately 8:30pm EDT. Stay tuned to StreetInsider.com's section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
General Electric has seen some price movement through the quarter; shares rose 19.6%. Much of the increase came in the last month, as the stock surged from $15.90 to $18.20, a possible signal of confidence by investors. Shares are currently up 28.4% YTD. By comparison, the S&P 500 is up 8.4% since the beginning of 2010.
The company is expected to report EPS of $0.16 for the quarter, on revs of $37.10 billion. Last quarter, the company reported better-than-expected EPS of $0.28 on sales of $41.4 billion. EPS from the same quarter last year came in at $0.26 and revs came in at $38.41 billion.
Data from Bloomberg shows that 8 of analysts have a Buy rating, 9 have a Hold, and none recommend selling the stock. The analyst consensus price target is $19.85, with a high of $22.00, and an low of $17.50.
News Through the Quarter
In early January, GE Healthcare and Intel (NASDAQ: INTC) announced that they would be expanding their sales and marketing agreement to include the U.K. for the Intel Health Guide.
News that the U.S. FDA is going to become more stringent on radiation exposure stemming from certain medical imaging procedures might put an additional cost on GE that it hadn't seen before in order to update their CT scanners, nuclear medicine studies, and fluoroscopic imaging devices.
In February, GE signed a $200 million contract with the Kurdistan Region of Iraq to supply power generation equipment to two independent power plant projects.
CEO Jeff Immelt announced that he would decline his annual bonus for the second year in a row.
Finally, at the end of March, GE announced that they have paid $150 million to acquire a liquefied natural gas receiving terminal under construction in Mississippi that will increase natural gas supplies to the Northeast and Southeast United States.
Analyst Ratings Through the Quarter
J.P. Morgan put out a report in January that had investors snapping up shares of GE. The firm set a price target of $22 on GE, at that time a "Street high" price. Click here for more color from J.P. Morgan on the call.
Post-Q409, Goldman Sachs raised their price target on GE to $21, and reiterated their Buy rating. They also see continued momentum in the shares.
Late January saw Oppenheimer raise their price target on the company to $20 from $18, and maintained their Outperform rating Click here for more color from Oppenheimer.
Sterne Agee upgraded the stock from Sell to Neutral.
Bernstein also raised their price target on the company from $19 to $20, a 5.2% increase, while maintaining an Outperform rating on the stock.
Deutsche Bank is also raising their price target on GE to $20 ahead of the Q110 earnings release, maintaining their Hold rating on the shares. The firm notes that they see a sharp increase in GE Capital Services profit recovery in FY11/FY12. Some risks that they note are foreign exchange fluctuations, LIBOR rates, late-cycle order volatility, and raw material inflation.
Summary
General Electric recently noted that one of their first priorities is to increase the dividend which was slashed by about $0.68 throughout the course of the recession. Indeed, no small feat considering that the company is also aiming to buy the large preferred stake that Warren Buffett owns. These goals should be attainable, however, as GE is expected to end FY10 with about $25 billion in cash on the books. No large acquisitions are expected for FY10, although the potential for some smaller ones here and there is still floating around.
An area that investors should be paying attention to is in the service sector. Much of recently-renewed investor confidence comes from service revenue being able to bolster an ever challenging Capital segment. Additionally, CFO Keith Sherin recently commented that their long-term service agreement backlog is reaching $129 billion.
Based on historic data, General Electric is expected to release their Q1 results at approximately 8:30pm EDT. Stay tuned to StreetInsider.com's section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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