General Electric Company
) is scheduled to report its second-quarter 2014 results before the
opening bell on Jul 18. In the last reported quarter, General
Electric's operating earnings exceeded the Zacks Consensus Estimate
by a whisker. Let's see how things are shaping up for this
Growth Factors in the Second Quarter
General Electric is anticipating huge infrastructure orders to the
tune of $10 billion in 2014 from Latin America on the back of
surging demands for improved facilities for basic amenities and
well being. During the next few years, General Electric expects
revenues to increase 10-15% annually in Latin America, buoyed by
higher demand to cater to the infrastructure requirements for
industrial services such as power generation, transportation, water
and oil. The company expects to achieve this through growth in
markets in Argentina, Peru, Colombia and Chile, partially offset by
a slowdown in Brazil - the biggest economy in the region.
During the soon-to-be-reported quarter, General Electric procured a
huge contract to build the critical infrastructure in Angola
related to the railway and energy sectors from the Export-Import
Bank (Ex-Im) of the U.S. The deal financed by Ex-Im entails General
Electric to supply $650 million of energy equipment and $350
million worth of railway machinery to Angola.
The steady stream of infrastructure orders support General
Electric's strategic goal to focus on its industrial manufacturing
roots and reduce dependence on the financial sector to ease credit
risks. General Electric had also filed an initial public offering
(IPO) of its North American consumer lending unit. The IPO is
expected to be closed by late 2014. Subsequently, GE Capital Retail
Finance will operate under the name "Synchrony Financial" and will
trade on the New York Stock Exchange under the symbol SYF. With the
spin-off, General Electric expects operating earnings from its
industrial business to aggregate 70% of the total operating
earnings of the company by 2015.
Despite the best attempts to restructure its business, our proven
model does not conclusively show that General Electric is likely to
beat earnings this quarter as it lacks the key ingredients for a
: Expected Surprise Prediction or ESP, which represents the
difference between the Most Accurate estimate and the Zacks
Consensus Estimate, is currently pegged at 0.00%. This indicates a
likely in line earnings for the shares.
Zacks Rank #3 (Hold): General Electric's Zacks Rank #3 reduces 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 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:
American Airlines Group Inc.
), earnings ESP of +1.56% and Zacks Rank #1 (Strong Buy).
American Campus Communities, Inc.
), earnings ESP of +3.57% and Zacks Rank #2 (Buy).
Crown Holdings Inc.
), earnings ESP of +4.00% and Zacks Rank #2 (Buy).
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