General Electric Company (NYSE: GE : 16.305, -0.325 ) is scheduled to report its third quarter earnings on Oct 21, 2011.
A few hours back, GE announced that it is redeeming preferred stock sold to Warren Buffett's Berkshire Hathaway Inc. in October 2008. This is a sign of strength in the company's top-line and bottom line development.
Industrial sales are likely to come in at $22.6 billion, and financial services sales could come in at $12.26 billion. Healthcare and transportation earnings should have boosted Industrial sales.
GE Capital has been showing improvement over the last few months,but could have actually faced some headwinds in the third quarter. For instance, historically there's an increase in delinquencies in the third quarter in the consumer business. Given that consumer confidence and job markets were not exactly doing well in the third quarter, it is natural for me to see the contribution from GE Capital declining in the third quarter.
There could be some bad news on asset quality metrics. The U.S. retail finance, and commercial real estate businesses are expected to have done poorly while U.K., home lending, and global banking should have strengthened.
Operating margins could come down driven by broad based margin declines across products. For instance, margins on renewable energy continue to show steady margin declines. The wind business is going to continuing to be a drag. Similarly, I guess margins on the aviation business would also have come down.
Net-on-net, I expect the company to report an EPS of $0.31 on sales of $34.86 billion. This compares well with an EPS of $0.28 on sales of $35.89 billion in the year ago quarter.
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