General Electric Co. (NYSE: GE) reported earnings and revenue misses on Tuesday and announced a dividend cut that was much more aggressive than anticipated. GE managed to fall short of rock-bottom expectations, but analysts say…
General Electric Co. (NYSE: GE) reported earnings and revenue misses on Tuesday and announced a dividend cut that was much more aggressive than anticipated. GE managed to fall short of rock-bottom expectations, but analysts say GE may soon be on the long, slow path to recovery.
GE reported third-quarter adjusted earnings per share of 14 cents on revenue of $29.57 billion. Both numbers missed consensus analyst estimates of 20 cents and $29.92 billion, respectively.
GE’s power unit was once again to blame for the weak quarter. Power revenue was down 33 percent to $5.73 billion. Weakness in power revenue was partially offset by aviation revenue, which was up 12 percent to $7.48 billion. Renewable energy revenue was also up 15 percent to $2.87 billion.
Oil and gas revenue was up 7 percent to $5.67 billion. Health care revenue was down only slightly to $4.70 billion. Transportation revenue was down 2 percent to $932 million, and lighting revenue was down 18 percent to $385 million.
GE Capital reported net income from continuing operations of $19 million after reporting a net loss of $207 million in the second quarter.
“After my first few weeks on the job, it’s clear to me that GE is a fundamentally strong company with a talented team and great technology,” new CEO Larry Culp says in a statement. “My priorities in my first 100 days are positioning our businesses to win, starting with (the) power (unit), and accelerating deleveraging.”
Part of that strategy to improve GE’s financial position includes aggressively cutting GE’s dividend for the second time in a year. GE announced it will be reducing its quarterly dividend by about 92 percent from 12 cents per share to just 1 cent per share. The company said the cut will allow GE to retain about $3.9 billion in much-needed cash.
Following Tuesday’s initial 2.2 percent decline, GE stock is now down 63.1 percent in the past three years. Bank of America analyst Andrew Obin says investors should remain cautious with GE stock for now, but it could eventually develop into a profitable long-term recovery play.
“It appears that new CEO Larry Culp is taking his time to set expectations, but [it] could mean more bad news later this year,” Obin says.
Bank of America has a “neutral” rating and $14 price target for GE stock.