GE announced 22Q3 revenues of $19.5 billion, up 0.5% year-over-year, a GAAP loss per share of $0.14, compared with 21Q3’s $0.54 profit, and non-GAAP EPS of $0.35, below 21Q3’s $0.53. I had anticipated a GAAP EPS of $0.44 per share and non-GAAP EPS of $0.75.
During the quarter, GE recorded a $505 million charge at GE Renewable Energy to cover estimated warranty costs for its onshore wind turbines. Excluding that charge, GE’s non-GAAP EPS was $0.75. Excluding the warranty reserve charge, much stronger performance at GE Aerospace offset declines at the other three businesses and higher income taxes.
Based mostly upon the impact of the warranty reserve charge, the weaker performance at GE Renewable Energy and weaker than previously anticipated performance at GE Power, the company reduced its full year 2022 non-GAAP EPS guidance to $2.40-$2.80, down from the low end of the $2.80-$3.50 range previously. It now expects full year free cash flow of $4.5 billion. My revised earnings projections are in line with that guidance.
Despite the disappointing developments at GE Renewable Energy, I am maintaining my strong buy rating and price target of $90. My price target needs to be updated considering GE HealthCare’s Form 10 filing and the recent declines in the broader market’s valuation multiple. I will provide an updated analysis, including 2023 estimates for GE post-the HealthCare spin-off, in November, after the end of the 22Q3 earnings season.
This is a summary of my recent update report on General Electric Company (GE). For a copy of the full report, reach out to me using the contact information provided below:
October 27, 2022
Stephen P. Percoco
16 W. Elizabeth Avenue, Suite 4
Linden, New Jersey 07036
© 2015-2023 by Stephen P. Percoco, Lark Research. All rights reserved.
This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.