General Electric (GE) and Boeing (BA) are due to report earnings for the third quarter next week. Both GE stock and BA stock have rallied nicely into earnings, coming off late September lows.
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Along with earnings, General Electric will update investors on the planned spinoffs of its health, power and renewable energy businesses. GE will emerge as an aviation-focused company starting in 2024.
General Electric supplies plane makers Boeing and Airbus (EADSY) with jet engines. This month, Delta Air Lines (DAL) and United Airlines (UAL) signaled that demand for commercial air travel continues to recover after the pandemic. But growing recession fears and lingering supply disruptions continue to ripple through the manufacturing chain.
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General Electric Earnings
Estimates: Analysts polled by FactSet expect a 17% EPS decrease to 47 cents on a 0.5% revenue drop to $18.346 billion. They predict free cash flow (FCF) of $284.5 million, up from the prior quarter but down sharply from a year ago.
Results: Check back Tuesday before the market open.
Outlook: Wall Street sees full-year EPS of $2.67 and full-year FCF of $4.25 billion. GE guided lower in late July citing supply-chain challenges and pressures on working capital.
GE Stock
Shares of General Electric rose 4.1% to 72.82 in Friday’s stock market trading, retaking the 50-day moving average. GE stock posted its third straight week of gains, up 7.8%, but remains below the 200-day line.
On Sept. 15, GE CFO Carolina Dybeck-Happe said supply disruptions continue to weigh on the jet-engine and health-care units.
For cyclical, multi-industry companies, Wall Street worries about a deteriorating macro outlook and a possible global recession.
“Actual 3Q22 earnings, albeit against low expectations, should be in line, but investors are unlikely to care,” RBC analyst Deane Dray wrote in a note to clients Oct. 5. “What matters this quarter will be any confirming falloff in demand or inflection in forward commentary.”
The analyst cited headwinds ranging from inflation and rate hikes to foreign exchange, chip shortages, European economic slowing and the Russia-Ukraine war.
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Boeing Earnings
Estimates: Wall Street sees Boeing swinging to EPS of 14 cents from a loss of 60 cents a year ago, snapping a string of four straight losses. Revenue is seen growing 18% to $18.014 billion. They predict a return to free cash flow (FCF), of $1.077 billion.
Results: Check back Wednesday before the market open.
Outlook: For the full year, Wall Street sees a net loss of $1.81 per share and FCF of $595.5 million. Analysts expect annual Boeing earnings to return in 2023, after four years of losses.
BA Stock
Shares of Boeing rose 1.6% to 141.32 Friday. Boeing stock scored its third consecutive week of gains as earnings loom but remains below both the 50-day average and well below the 200-day line.
Boeing is trying to extend the deadline to win certification of two new 737 Max variants. The 737 Max jet was grounded worldwide in recent years after two fatal flights, hitting Boeing earnings.
Meanwhile, a worker shortage has delayed the production of jet engines and aircraft, while air travel recovery has been gathering steam.
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