GE Earnings Preview: Will the Conglomerate Post Another Profit Gain?

General Electric
General Electric

General Electric (GE) is expected to post higher earnings when it reports third quarter results early Friday morning. Analysts, on average, expect the multinational conglomerate to report earnings of 27 cents per share, up from 22 cents per share in the year-ago period.

Net income is expected to come in at $2.92 billion, boasting a 17% growth over last year's $2.5 billion result. But this would only be GE's second straight improvement in quarterly profit after two years of declines or flat growth. Last quarter, GE 's profit grew by 11%, topping analysts' expectations.

Revenue, however, is expected to decline marginally at the the industrial behemoth. Estimates range from an average of $37.4 billion, according to Bloomberg to $37.7 billion, according to FactSet Research. In the year ago period, the company reported revenue of $37.8 billion.

GE, whose businesses include consumer and business financing, power generation, household appliances, aircraft engines, medical imaging and media content, has been struggling since the recession. Its finance arm -- GE Capital -- was hit hard during the financial crisis, dragging the giant down. Investors will scrutinize the company's operations -- more than the numbers -- to see how it has managed so far and where it's going from here.

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Analysts expect the recent trend to reverse and to see GE Capital as the primary driver for earnings growth, MarketWatch reports, while the industrial components unit will weigh on the company. Healthcare, however, is expected to continue to provide solid growth. GE said last quarter total orders volume grew 17% and the backlog was at $172 billion.

Worldwide, the Fairfield, Conn.-based company stands to benefit from robust economic growth in China and India, which would offset the modest recovery and sluggish growth at home.

Looking ahead, CEO Jeffrey Immelt said that the company plans to refocus on its industrial segment and reposition the finance arm to its strength areas. And for that, according to Bloomberg, GE expects to have as much as $25 billion, much of it from cash-hoarding during the crisis. GE used some of the cash to increase its quarterly dividend in the third quarter.

GE already announced last week it is buying privately held Dresser, a global energy infrastructure technology and service provider for $3 billion. Also, GE Capital bought $1.6 billion in assets in retail finance portfolios from Citigroup's (C) Citi Retailer Partner Cards.