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Ge's Stock Plunges After Profit Forecast Misses for the First Time in 20 Months

January 23, 2024
minute read

Shares of General Electric Co. (GE) experienced a decline on Tuesday, following the aerospace, power, and renewable-energy company's disappointing profit outlook for the current period, which overshadowed a fourth-quarter earnings beat driven by the strength of GE Vernova businesses.

For the first quarter until March, GE anticipates adjusted earnings per share in the range of 60 cents to 65 cents, falling below the current FactSet consensus of 70 cents.

In the full-year 2024 forecast, operating profit is projected to be between $6.0 billion and $6.5 billion, reflecting the independent operation of GE's businesses. BofA Securities analyst Andrew Obin noted that the outlook, which includes $600 million in stand-alone costs, contrasts with Wall Street expectations of $7.1 billion.

The GE stock fell 1% in morning trading, recovering from earlier post-open losses of up to 3.6% and premarket losses of as much as 10.1%. The stock's decline follows its Monday close at the highest price since October 24, 2017.

This earnings report from GE may be the final one before the expected breakup in early April. The power and renewable-energy businesses are set to be spun off as GE Vernova, while the remaining business will be rebranded as GE Aerospace.

For the fourth quarter, net income dropped to $1.59 billion, or $1.45 per share, from $2.10 billion, or $1.90 per share, in the same period the previous year. Adjusted earnings per share, excluding one-time items, rose to $1.03 from 66 cents, surpassing the FactSet consensus of 90 cents.

Total revenue saw a 15.4% increase to $19.42 billion, well above the FactSet consensus of $17.27 billion. Free cash flow reached $3.0 billion, exceeding the average estimate of $2.77 billion from two analysts surveyed.

In GE's business segments, Aerospace revenue grew by 11.9% to $8.52 billion, surpassing the FactSet consensus of $8.50 billion. Orders increased by 9.7% to $10.62 billion.

For GE Vernova's businesses, power revenue rose by 15% to $5.79 billion, surpassing the FactSet consensus of $4.89 billion, and renewable-energy revenue increased by 23.4% to $4.21 billion, beating expectations of $3.71 billion. Power orders grew by 5.3% to $5.73 billion, and Renewable Energy orders were up by 0.8% to $5.07 billion.

Looking ahead, GE is set to host investor days for GE Vernova on March 6 and for GE Aerospace on March 7.

Larry Culp, CEO of GE and GE Aerospace, expressed confidence in the path forward, stating, "I've never been more confident in the path ahead. We've created industry leaders that will carry GE's commitment to innovation and continuous improvement while grounded in vital missions."

Over the past three months, GE's stock has risen by 21.7%, outpacing the 15.1% climb of the S&P 500.

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