General Electric Co. (NYSE: GE) investors got some much-needed relief on Friday after the company reported second-quarter earnings numbers that weren’t as bad as feared. But even after the earnings beat, analysts say there’s still too much uncertainty at GE for long-term investors to feel confident buying the stock.
GE reported second-quarter earnings per share of 19 cents on revenue of $30.1 billion. Both numbers topped consensus analyst estimates of 17 cents and $29.31 billion, respectively. Revenue was up 3 percent from a year ago.
The strong quarter was driven by aviation revenue, which was up 13 percent to $7.5 billion. Power and renewable energy, GE’s other two core segments, did not fare so well. Power revenue was down 19 percent to $7.5 billion and renewable energy revenue was down 29 percent to $1.6 billion.
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Oil and gas revenue was up 85 percent to $5.5 billion. Health care revenue was up 6 percent to $4.9 billion. Transportation revenue was down 13 percent to $942 million, and lighting revenue was down 9 percent to $431 million.
GE Capital reported a loss from continuing operations of $207 million, up from a $172 million loss a year ago.
“The second quarter was in line with expectations, and we saw continued strength across many of our segments, especially in aviation and health care,” CEO John Flannery says in a statement. “We expect the power market to remain challenging, and we continue our focus on operational improvement.”
GE recently announced its long-term restructuring plan, which includes spinning-off health care and Baker Hughes ( BHGE) as part of $20 billion in divestitures. Moving forward, GE plans to focus on its core businesses of aviation, power and renewable energy. Last month, GE said it would be adjusting its dividend payout after it completes the separation of its health care unit.
Investing.com analyst Haris Anwar says long-term investors need to be patient and let the GE story play out a bit before buying in.
“There is no easy way to value GE, which is in the process of divesting its major businesses and struggling to raise cash to avoid a debt rating cut,” Anwar says. “Right now it’s better for risk-averse investors to stay on the sidelines.”
[See: 10 Worst S&P Dividend Stocks in the First Half of 2018.]
GE stock gained 2.3 percent Friday morning following the report but remains down 49 percent overall in the past year.
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GE Earnings Beat Triggers Relief Rally originally appeared on usnews.com
