GE Analysts Expect Weaker Quarter But Big Picture May Matter More

General Electric GE -- which bills itself as the world’s largest digital industrial company as it looks to reposition its image to the investing public -- will be enlightening investors and analysts about its efforts to return to its industrial roots.

It will have that opportunity with an earnings report due out on Friday. Analysts surveyed by Thomson Reuters expect GE to report a Q3 per-share profit of $0.26 on topline sales of $28.65 billion when the blue-chip industrial giant reports results before the market opens.

If realized, that will mean that both the top and bottom lines fell considerably from $0.38 a share on revenue of $36.2 billion a year ago.

But Wall Street wants the bigger picture as the giant that is GE has shed most of its financial operations, GE Capital, to focus on products ranging from refrigerators to jet engines to cleaner, more advanced technologies that deliver a quarter of the world’s electricity, according to several promotional reports from the company in recent months.

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This year—including this week’s announcement of the $32 billion asset sale of commercial loan and lease portfolios to Wells Fargo (WFC)—GE has sold off some $97 billion in financial assets. It also is looking to extricate another $26.5 billion in real estate assets, GE has said.

Let’s not forget too that GE’s earnings could be hit with the same currency fluctuations that multinationals have been facing all year.

GE’s stock took a tumble after the Wells Fargo announcement, but is still up nearly 17% since hitting a pit in mid-January (figure 1). Its revival is due in part to a mini rally that began in late September. It’s also outperformed the S&P 500 Industrials Index, which is down some 4% since mid-January.

The short-term options market isn’t looking for anything spectacular share-wise around the GE earnings release based on the rather tame 0.6% expected potential share move, in either direction, priced in to the thinkorswim platform's Market Maker Move indicator.

Still, many investors could be looking to GE earnings to tell a bigger story of current U.S. economic health, currency impact, and the evolution of traditionally industrial companies.

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