Industrial giant General Electric (N:GE) is set to report earnings Friday before the opening bell. The Estimize consensus is calling for EPS of $0.28 and revenue of $28.64 billion while Wall Street is expecting lower earnings per share of $0.26 and higher revenues of $28.75 billion. GE has been poised for long-term growth and seems like a promising investment under CEO Jeffrey Immelt.
Restructuring Plans
GE wants to focus solely on being an industrial firm, specifically dominating the market in aviation and power. To complete this change, the company has been selling off various parts of its business, particularly the financial divisions. Currently, an agreement of sale has been made between the industrial conglomerate and Wells Fargo (N:WFC). GE will sell its $30 + billion commercial lending and leasing business to the bank as a part of a critical process to reduce the size of GE Capital assets by $100 billion. The Connecticut based firm has already sold off $97 billion in assets.
Additionally, GE has been able to produce gains in its industrial segment, hence the restructuring. For example, in Q3 2014, the firm posted approximately $26 billion in industrial revenue, a 3% increase over the previous quarter that year. However, this quarter may not be as strong due to a decline in the gas and oil industry, as well as currency headwinds.
Disciplined Acquisitions?
Last month, GE got the go-ahead from the European Union antitrust executives to purchase the power unit from French firm, Alstom (PA:ALSO), for $14 billion. Moreover, bids have also been made for parts of Halliburton (N:HAL), specifically the drilling business.
The acquisition of Alstom proves that GE has been following its goal of returning to its industrial roots and further permits the company to be a force overseas, competing with the likes of Siemens. The Halliburton case may end up being a steal. Though there is plenty of competition for the assets the oil company is attempting to sell, this opportunity could be huge for GE. Oil prices prices fell 16% this year, revenues may have significantly declined. At a lower valuation, completing a deal with Halliburton would extend GE’s reach into the Middle East and parts of Africa.
Stock Trends
Shares shot up when the Trian Fund, run by Nelson Peltz, announced a $2.5 billion investment in the corporation. The organization has also experienced a 52-week low of $19.37 and a March high of $28.68. As GE continues to divest in GE Capital, the stock could potentially reach new highs and challenge the figure from March.
