GE's Slowing Aerospace Growth Could Hinder Earnings Performance for Q4

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Christopher Pike / Bloomberg via Getty Images

Key Takeaways

  • General Electric Co. (GE) is expected to post sharp year-on-year (YOY) declines in net income, revenue, and diluted EPS when it reports fourth-quarter 2023 results on Tuesday before market open.
  • GE's Aerospace segment could post revenue growth slowing to 11% YOY, the lowest level in two years, as a post-COVID surge in airline business fades.
  • Once the GE Vernova energy business unit spins off in the second quarter of 2024, the company's Aerospace division will be its sole remaining unit.

General Electric Co. (GE), the onetime industrial leader that has jettisoned multiple units in recent years, is forecast to report a sharp year-over-year (YOY) drop in diluted earnings per share (EPS) and revenue for the final quarter of 2023 when it releases results on Tuesday morning. The company's core aerospace segment is expected to post its slowest growth in two years.

GE is likely to say that net income fell by more than half to $915.2 million compared with the same period a year earlier, while revenue dropped more than 18% to $17.8 billion. Diluted EPS is predicted to come in at 88 cents, compared with $1.79 in the last quarter of 2022.

General Electric Analyst Estimates for Q4 2023
  Analyst Estimates for Q4 2023 Q3 2023 Q4 2022
Revenue $17.8 billion $17.3 billion $21.8 billion
Diluted Earnings Per Share ($) $0.88 $0.23 $1.79
Net Income  $915.2 million $258.0 million $1.99 billion
Source: Visible Alpha

Key Metric

Investors should watch revenue figures for GE's core Aerospace division, which has posted several straight quarters of sales growth above 20%. When GE completes the spinoff of its energy arm as GE Vernova at the beginning of the second quarter of this year, the aviation business will be its sole remaining unit. GE's Aerospace division serves both commercial and military aircraft needs and includes the design and production of engines and engine components, power, and mechanical systems.

Analysts predict GE's Aerospace revenue growth to slow to just over 11%, reaching $8.5 billion for the fourth quarter of 2023. This would mark the slowest pace of growth for the segment in two years. GE's Aerospace business got a significant boost as airlines returned to normal operations following the COVID-19 shutdown, but that surge may be slowing.

Business Spotlight

Since announcing the timeline for the spinoff of GE Vernova in October, GE has heavily promoted its energy business efforts. In the last quarter of the year, the company announced GE Vernova's involvement in major energy infrastructure projects in Spain, the U.S., and the U.K., among others. The company may be working to bolster this business ahead of its separate listing on the New York Stock Exchange (NYSE) later this year.

GE stock has risen steadily in the past year, climbing by about 62% in the year up to Jan. 19.
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