General Electric Company (NYSE: GE) has had a rough go of it so far in 2018, and investors are hoping the company and the stock can get back on track when GE reports first-quarter earnings on Friday morning.
Unfortunately, analysts say GE still has a long way to go before the stock becomes safe for long-term investors.
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Analysts are expecting GE to report first-quarter adjusted earnings per share of 12 cents on revenue of $27.52 billion.
GE’s financial situation has been particularly complicated lately after the company retroactively restated its 2016 and 2017 earnings last week. GE reduced its 2016 and 2017 EPS by 13 cents and 17 cents, respectively. GE also reduced 2016 revenue by $220 million and 2017 revenue by $2.2 billion. GE’s first-quarter earnings are expected to incorporate its new accounting standards.
In addition to first-quarter numbers, investors will be watching closely for any reduction in GE’s full-year earnings guidance after the company previously cut guidance multiple times over the past year. Last quarter, GE guided for full-year earnings of between $1 and $1.07 per share.
Investors will also be watching for any commentary related to the stock’s 3.4 percent dividend. Last week, Cowen analyst Gautam Khanna said GE shareholders are facing the possibility of a second dividend cut in less than a year.
“We don’t believe the 48-cent-per-year dividend is safe unless ‘contract assets’ convert to cash on a net basis, and/or the Power market rebounds sharply and soon,” Khanna said, according to CNBC.
Khanna also said investors should prepare for another earnings miss on Friday, calling for adjusted EPS of just 8 cents.
Bank of America analyst Andrew Obin predicts GE will be able to clear Wall Street’s low bar this quarter, but investors shouldn’t expect to be wowed. Bank of America is calling for first-quarter EPS of 12 cents and full-year 2018 EPS of just 92 cents.
[See: 7 of the Best Stocks to Buy for 2018.]
“We note that the company has undergone a significant reinvestment cycle, positioning the company well from a competitive standpoint,” Obin says. “However, we do not see the stock outperforming in the face of possible further negative earnings revisions.”
Cowen has a “market perform” rating and $12 price target for GE. Bank of America has a “neutral” rating and $17 target for GE stock.
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GE Stock: What to Expect From General Electric Company Earnings originally appeared on usnews.com
