News

GE Aerospace GE reported first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

In April 2024, GE Aerospace emerged as a separate public company, following the spin-off of GE Vernova Inc. GEV from General Electric. Notably, GE Aerospace’s first-quarter results include the performance of GE Vernova, as the spin-off was completed after first-quarter-end.

Inside the Headlines

In the quarter under discussion, the company’s adjusted earnings came in at 82 cents per share, which beat the Zacks Consensus Estimate of 67 cents. The bottom line surged 203.7% year over year.

Total segment revenues came in at $15.2 billion, representing an increase of 11% year over year. However, the top line missed the consensus estimate of $15.7 billion. Total orders grew 14% on a year-over-year basis to $20.1 billion.

Segmental Discussion

Aerospace revenues jumped 16% year over year to $8.1 billion in the reported quarter, driven by robust demand for commercial engines & services and defense & propulsion technologies. Organic revenues rose 15% year over year.

GE Vernova (now a standalone company), before the spin-off, had two subsegments, namely Renewable Energy and Power.

The Renewable Energy segment’s revenues totaled $3 billion, up 6% year over year. Organically, the same increased 4%. Results benefited from strong momentum in Grid and Offshore Wind.

The Power segment’s revenues were up 8% year over year to $4.1 billion. Organic revenues increased 7%. An increase in Gas Power heavy-duty Gas Turbine and Aeroderivative orders aided the segment’s performance.

GE Aerospace Price, Consensus and EPS Surprise

Margin Profile

In the quarter under review, GE Aerospace’s cost of sales increased 8.4% year over year to $11.6 billion. Selling, general and administrative expenses increased 6.1% year over year to $2.3 billion. Research and development expenses totaled $507 million, reflecting an increase of 17.6% year over year.

GE Aerospace’s adjusted profit was $1.5 billion, up 76% year over year. The margin in the quarter was 10.2%, up 380 basis points.

Balance Sheet and Cash Flow

Exiting first-quarter 2024, GE Aerospace had cash, cash equivalents and restricted cash of $18.4 billion compared with $17 billion at the end of December 2023. The company’s long-term borrowings were $19.5 billion compared with $19.7 billion at the end of December 2023.

Adjusted free cash flow was $850 million compared with $102 million in the year-ago period.

In the first three months of 2024, GE rewarded its shareholders with a dividend payment of $86 million, down 57.6% year over year. The company repurchased 1.1 million shares for $0.1 billion during the quarter.

Outlook

For 2024, GE expects adjusted revenues to grow in the low-double-digit range from the year-ago period. Operating profit is estimated in the range of $6.2-$6.6 billion. Adjusted earnings are predicted in the band of $3.80-$4.05 per share. Free cash flow is anticipated to be more than $5 billion.

Beginning from second quarter of 2024, GE is expected to report its operating results under the Commercial Engines & Services and Defense & Propulsion Technologies segments.

GE Aerospace expects the Commercial Engines & Services segment revenues to grow in the range of mid-to-high teens and operating profit in the band of $6.1-$6.4 billion. For the Defense & Propulsion Technologies segment, revenues are projected to increase in mid-single-digits to high-single-digits range, while operating profit in the band of $1-$1.3 billion.

Zacks Rank & Stocks to Consider

GE Aerospace presently carries a Zacks Rank #4 (Sell).

A couple of better-ranked companies are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 10.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1% in the past 60 days. The stock has risen 19.5% in the past six months.

Carlisle Companies Incorporated CSL carries a Zacks Rank of 2 (Buy). CSL delivered a trailing four-quarter average earnings surprise of 7.6%.

In the past 60 days, the Zacks Consensus Estimate for CSL’s 2024 earnings has increased 3.8%. The stock has risen 53.3% in the past six months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.