GE Aerospace GE is scheduled to report second-quarter 2024 results on Jul 23, before market open.
The Zacks Consensus Estimate for its second-quarter earnings has increased 2.1% in the past 60 days. The company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average surprise being 32.8%.
Let’s see how things might have shaped up for GE Aerospace this earnings season.
GE Aerospace Price and EPS Surprise
GE Aerospace price-eps-surprise | GE Aerospace Quote
Factors to Note
GE Aerospace is expected to have benefited from a growing installed base and the higher utilization of engine platforms across commercial and defense end markets in the second quarter. Solid demand for commercial engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is likely to have boosted GE’s top-line performance.
The company has been witnessing robust orders for LEAP, GEnx & GE9X engines, critical aircraft systems and aftermarket services in the commercial aerospace market, which are likely to have augmented its commercial engines and services business performance. Also, higher demand for engines, defense equipment as well as propulsion and additive technologies, backed by rising U.S. & international defense budgets, is likely to have bolstered the revenues of GE’s defense and propulsion technologies business.
The company has also been making investments to expand and upgrade manufacturing facilities in the United States and overseas. These are likely to have enabled GE Aerospace to boost its production capacities and increase product deliveries to its commercial and defense customers. This, along with its focus on operational execution, robust backlog level and aim to generate healthy free cash flow, is likely to have been tailwinds in the second quarter.
It’s worth noting that in April 2024, GE completed the spin-off of its Vernova business. This marked the completion of the company’s multi-year portfolio restructuring actions. Although the spin-off is likely to have weighed on its year-over-year top-line comparison, the transaction is expected to have allowed GE to achieve better operational focus on its core aerospace business and financial flexibility. This is expected to have driven its margins and profitability in the quarter.
However, escalating operating costs and expenses, related to certain projects and restructuring activities, are likely to have impacted GE’s margin performance. Despite improving, supply-chain challenges, such as the availability of raw materials and labor shortages, especially in the defense market, are likely to have weighed on GE Aerospace’s operations.
Amid this, the Zacks Consensus Estimate for GE’s second-quarter total revenues is pegged at $8.38 billion, indicating a decline of 47.2% year over year. The consensus estimate for earnings is pegged at 98 cents per share, implying an increase of 44.1% from the prior-year levels.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for GE Aerospace this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as elaborated below.
Earnings ESP: GE Aerospace has an Earnings ESP of -1.54%, as the Most Accurate Estimate is pegged at 96 cents, lower than the Zacks Consensus Estimate of 98 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: GE Aerospace currently sports a Zacks Rank of 1.
Stocks With Favorable Combination
Here are three companies, which according to our model, have the right combination of elements to post an earnings beat this reporting cycle.
ITT Inc. ITT has an Earnings ESP of +3.43% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is slated to release second-quarter results on Aug 1. ITT’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.5%.
3M Company MMM has an Earnings ESP of +2.85% and a Zacks Rank of 3 at present. The company is scheduled to release second-quarter results on Jul 26.
3M’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 16.4%.
A. O. Smith Corporation AOS has an Earnings ESP of +0.78% and a Zacks Rank of 3 at present. It is slated to release second-quarter results on Jul 23.
A. O. Smith’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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