Will GE's Q2 Earnings Gain From Aviation, Renewable Energy?
Zacks Investment Research | Jul 28, 2019 09:07PM ET
General Electric Company (NYSE:GE) is scheduled to report second-quarter 2019 results on Jul 31, 2019, before the market opens.
The GE Aviation segment manufactures commercial and military jet engines and components as well as provides aftermarket services. It accounted for roughly 31.2% of Industrial revenues in the first quarter of 2019. Alternatively, the Renewable Energy segment — comprising wind and hydropower businesses — accounted for roughly 6.3% of Industrial revenues in the first quarter.
Apart from Power and Renewable Energy segments, the Industrial segment’s results include that of three other segments.
Factors to Influence Segments, Estimates
Over the past few quarters, the Aviation segment has supported top-line growth for General Electric. Notably, the segment pulled off a positive average revenue surprise of 2.43% in the past four quarters. Rising popularity of LEAP engines boosted the segment’s sales in the last reported quarter, with orders rising 7%. Operating profits were up 4%.
General Electric believes that strengthening services and military businesses will benefit the Aviation segment in 2019. Shipments of LEAP engines are believed to be in excess of 1,800 in 2019. It predicts the segment’s organic sales to increase in a high-single digit. Margin in the year is predicted to be roughly 20%.
For the second quarter of 2019, the Zacks Consensus Estimate for Aviation’s revenues is pegged at $8,171 million, roughly 2.7% above the previous quarter’s reported figure and above 8.7% from the year-ago quarter’s number.
For Renewable Energy, the company believes that organic revenues will grow in double-digits in 2019. Notably, growth in orders boosted the segment’s organic sales in the last reported quarter.
For the second quarter of 2019, the Zacks Consensus Estimate for Renewable Energy’s revenues is pegged at $2,642 million, suggesting growth of 64.7% from the previous quarter’s reported figure and above 59.8% from the year-ago quarter’s number. On the flip side, the segment pulled off average negative earnings surprise of 11.33% in the last four quarters.
Overall Q2 Expectations
The Zacks Consensus Estimate for the Industrial segment’s revenues in the to-be-reported quarter is currently pegged at $27,179 million, indicating growth of 6.5% from the previous quarter’s reported number and a 5.2% decline from the year-ago quarter’s figure. Profits for the Industrial segment are likely to be $2,600 million, up 3.1% from the previous quarter’s reported figure and down 17.6% from the year-ago quarter’s number. (Read more: Zacks Investment Research
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