General Electric Company
) is scheduled to report its fourth-quarter and full year 2013
results before the opening bell on Jan 17. In the last reported
quarter, General Electric's operating earnings marginally beat
the Zacks Consensus Estimate by a penny. Let's see how things are
shaping up for this announcement.
Growth Factors in the Fourth Quarter
General Electric is realigning its corporate structure to a
manufacturing-based entity with emphasis on big-ticket items,
such as, medical equipment and scanners. In a recent investor
meeting, General Electric reiterated its strategic goal to focus
on its industrial manufacturing roots and reduce dependence on
the financial sector as it aims to increase the corporate profit
share from the industrial units. Jeff Immelt, the Chief Executive
of the company, further believes that 2014 will be relatively
better than 2013 with record backlog of orders.
During the investor presentation, General Electric forecast
double-digit growth in profits from aviation, healthcare and
other industrial units in 2014, driven by higher investments in
the industrial sector. Operating profit margin from the
industrial businesses is expected to be 15.8% in 2013, up from
15.1% in 2012. At the same time, General Electric observed that
it is currently on track to reduce its profit share from the
financial units to 30% of the total by 2015.
Our proven model shows that General Electric is likely to beat
earnings because it has the right combination of two key
: Expected Surprise Prediction or ESP, which represents the
difference between the Most Accurate estimate and the Zacks
Consensus Estimate, is at +1.89%. This is a meaningful and
leading indicator of a likely positive earnings surprise for
Zacks Rank #3 (Hold): General Electric's Zacks Rank #3 increases
the predictive power of ESP. Note that stocks with Zacks Ranks of
#1, #2 and #3 have a significantly higher chance of beating
earnings. The Sell rated stocks (#4 and #5) should never be
considered going into an earnings announcement.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows that these have the right combination of elements to
post an earnings beat this quarter:
Cablevision Systems Corporation
), earnings ESP of +77.78% and Zacks Rank #1 (Strong Buy).
Genco Shipping & Trading Ltd.
), earnings ESP of +54.90% and Zacks Rank #2 (Buy).
Trinity Industries Inc.
), earnings ESP of +2.11% and Zacks Rank #1 (Strong Buy).
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