Will GE Get The Spark It’s seeking From Electrolux Sale?
Estimize | Jul 16, 2015 03:13PM ET
General Electric Company (NYSE:GE) will report FQ2 earnings before Friday's opening bell. The Estimize consensus, pulling estimates from 37 different analysts, is set 3 cents above the Wall Street consensus at $.37. The Estimize revenue consensus also surpasses that of the Street, coming in at $30.6B versus $28.7B. Of the past 8 quarters, Estimize has been more accurate than the Wall Street consensus 4 times. Of the remaining half of reports, Estimize has split the difference with Wall Street twice, and it has been less accurate only once.
Recently, GE decided to terminate its lending operation and shrink the size of GE Capital in order to escape regulations by the Federal Reserve. In contrast, the company has been working to expand its profit margins on its industrial segment, projected to increase by 2-5%.
However, GE has been facing some pressing problems that may account for its stagnant stock action. On July 1, the U.S. Justice Department filed to block the sale of GE’s home appliance business to Electrolux, AB (ST:ELUXa), a Swedish based company. The sale was priced at $3.3B and, according to the U.S. Justice Department, it would give Electrolux an unrivaled monopoly in the U.S. market.
In the European market, regulatory agencies have expressed concerns about GE’s foothold. GE moved to purchase Alstom SA's (PARIS:ALSO) energy business for $17B, a deal that European antitrust regulators think would give too much power to GE.
Overall, the company has performed relatively well against the S&P 500 and the Dow Jones Industrial Average, of which it's a part. Specifically, the stock price experienced a nearly 10% jump on April 10th when the company announced its divestiture of GE Capital. Since then, price returns have fluctuated, still keeping the company’s returns above that of the two indices.
Friday’s report will be telling as GE looks to improve its bottom line. With a considerable delta between the Estimize consensus and Wall Street’s expectations, it appears that GE may achieve the success it is looking for tomorrow.
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