General Electric: And The Beat Goes On, Or Does It?

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WG Investment Research


  • GE has beat the consensus EPS estimates in 7 of the last 8 quarters; however, Q3 2017 will likely be the first earnings miss in the last 2 years.
  • There are rumors that a dividend cut is coming for GE in the near future.
  • GE is a long-term buy at today's price.

To say that General Electric (NYSE:GE) has been a battleground stock would be the understatement of the year. Shareholders of this industrial conglomerate have been taken on a roller coaster ride over the last two years, and the recent trend has not been favorable for the loyal long-term holders of GE shares.

(Source: Nasdaq)

GE is set to release its Q3 2017 operating results later in the week and many pundits are already calling for the company to report a kitchen-sink type of quarter. While there are definitely significant risks that need to be considered (covered later in this article), I believe that GE's portfolio of businesses makes the company a great long-term investment at today's price.

And The Beat Goes On, Or Does It?

Per Yahoo! Finance, GE is expected to report EPS of $0.49 for Q3 2017. For comparison purposes, the company reported EPS of $0.32 for the same period in the prior year. Most people do not believe me when I tell them that this company has reported better-than-expected earnings in seven of the last eight quarters (and met the estimate in the other quarter).

(Source: Fidelity)

As shown, the company's EPS has been drifting lower over the last two years, but let's not forget that this company is in the midst of a major restructuring effort. Restructuring is not an excuse for GE and its management team but, instead, GE's earnings coming in at lower amounts now when compared to prior years is a direct result of the restructuring efforts. It is important to remember that this company has been selling its financing assets (over $200B over the last two years), replacing [some] of its financing earnings with earnings from industrial businesses (i.e., less risky, and more valuable earnings), and buying back shares hand over fist.

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long GE, HON. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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