General Electric Company (NYSE:GE) plans to report fourth-quarter and full-year financial results on Friday, January 17, 2014 at 08:30am EST. Afterwards, Jeff Immelt, Chairman and CEO - GE; Jeff Bornstein - Senior Vice President & Chief Financial Officer; and Trevor Schauenberg, VP Investor Communications - GE will host a webcast to discuss 4th quarter and total year 2013 results.
Wall Street anticipates that the transitioning company will earn $0.53 per share for the quarter, which is 20.45% better than last year's $0.44 per share. iStock expects the Dow Jones member to beat Wall Street's consensus number. The iEstimate is $0.54; a penny better than the street's outlook.
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General Electric Company is getting back to his roots by focusing on diversified machinery and away from the finical business that hurt the company during the subprime meltdown.
The blue-chip company has exceeded Wall Street's consensus earnings estimate 13 of the last 16 quarters while matching the street's outlook the reaming three quarters. Typically, the 122-year-old company beats the consensus by $0.02 with a bullish surprise range of $0.01 (2.33%) to $0.05 (31.25%).
While GE's EPS history is heavily tilted towards upside surprises, the stock's earnings-driven price sensitivity barely favors gains. GE shares went up an average of 3% in the days surround nine of the last 16 quarterly checkups. Meanwhile, shares put it in reverse an unlucky seven of the last 16, losing an average of -3.74%.
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In total, a $10,000 investment three days before the profit news and selling three days after the release would have netted $2,700 in the last four years – hope that makes sense. So, trading GE's earnings generated a positive return-on-investment (ROI) of 1.69% per quarter for the last 16. That's not bad for a six day holding period.
The January release has heavily favored a bullish response with three of the last four generating gains. In fact, January generated three of the top five performances and the lone loss was the smallest of the seven.
A $10,000 investment in the last four Q4 releases grossed $1,120, or a ROI of 2.8%, that's even better!
After reviewing GE's most recent 10-Q, it's no wonder management wants to unload many of its services business. The costs for the services division are rising faster than sales, which isn't good for operating or net margins. News on divestitures most likely would please investors.
iStock is also concerned with GE's inventory increasing 16.71% while sales fell 1.46%, not the combo we prefer. Year-over-year, inventory grew to 50.22% of revenue from 42.41%. Again, not the direction we'd like to see the balance-sheet line item take.
Overall: General Electric Company's (NYSE:GE) history and iEstimate suggest another small bullish surprise for Friday morning's announcement; January has been particularly beneficial; however, there are a few red-flags that investors would be wise to monitor.
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