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GE stock surges on huge EPS beat

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  • General Electric prints huge EPS beat, also surpasses expected revenue for Q2.
  • GE stock has beaten consensus on adjusted EPS seven out of the past nine quarters.
  • The energetic conglomerate stock is still trading on a long-term downtrend.

UPDATE: General Electric earnings pleasantly surprised shareholders with a huge 86% beat on EPS for Q2, printing 0.78 vs the 0.42 expected. Total USD revenue for the energetic conglomerate also surpassed expectations, with the reported 18.65B figure beating the 17.90B Wall Street consensus. Thanks to these results, GE stock has jumped to the psychological $70 mark on Tuesday’s pre-market trading, up 3% from Monday’s closing price of $68.36. The energy company stock continues to trade inside its long-term downtrend channel (see technical analysis section at the end of the article) but these earnings might help GE share price stage a bigger bounce towards the upper side of the channel.

All 14 revisions to General Electric‘s second quarter earnings forecast in the past 90 days have been downward revisions. That about sums up the market’s expectations for the industrial conglomerate’s second-quarter earnings release, which is expected to arrive before the market opens on Tuesday.

Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

Wall Street consensus expects $0.42 in adjusted earnings per share (EPS), $0.29 in GAAP EPS and revenue of $17.9 billion.

General Electric earnings news

General Electric has beaten consensus on adjusted EPS six out of the past eight quarters and has beaten revenue forecasts in five of eight quarters. This demonstrates how uncertain much of the market is with respect to General Electric. The business is enormous and generally hard to forecast. General Electric does not have a great track record in terms of serving up earnings beats quarter after quarter. There tends to be a glitch.

Morgan Stanley released an earnings note two weeks ago that caused concern in some quarters. Though MS analyst Joshua Pokrzywinski maintained his Outperform rating on GE stock, he lowered the price target from $100 to $95. Pokrzywinski warned clients to stay clear of GE stock before Q2 results are released “as H2 expectations need to come down.” He wrote that the Aviation and Healthcare segments of the business would likely see the most issues due to supply chains.

JPMorgan’s client note sounded the alarm by forecasting that 2023 earnings will be about 30% short of Wall Street’s current forecasts. The current forecast calls for full-year earnings of $4.72 in 2023 but just $2.81 in 2022.

Management may choose to shed more color on its recent agreement with BAE Systems (BAESY) for power management systems in combat aircraft. The agreement involves General Electric providing BAE Systems with access to its solid state power controller technology.

General Electric is planning to split into three separate companies over the next two years. First, GE HealthCare is expected to take with it the entire health segment of the conglomerate and be listed on the Nasdaq under the ticker GEHC. GE Vernova will then leave in a tax-free spin-off in 2024, taking with it GE’s entire energy business that involves everything from combined cycle natural gas turbines to wind turbines. The aviation segment will then become a new entity called GE Aerospace and retain much of the current top management.

General Electric stock forecast

General Electric stock has been trending downward for most of the year within a broadening price channel. The top and bottom lines of the price channel currently sit at $83.38 and $58.19 and provide points of resistance and support, respectively.

GE stock is currently trading above the 5-week moving average but below its 15-week counterpart at $72. This latter price level should also work as resistance in the case of an earnings beat on Tuesday. In the event of an earnings miss, expect $60 to possibly hold up.

GE weekly chart

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