Key points
- GE shares rose 3.47% following a bullish earnings report.
- The report will be the last to include GE Vernova; Going forward, the GE stock symbol will be exclusively for GE Aerospace.
- The report could change analysts’ belief that GE shares are perfectly priced.
- 5 stocks we like best from GE Vernova
General Electrical NYSE:GE shares rose 3.47% in early trading after the company released its first-quarter earnings report. The company reported revenue of $16.1 billion and earnings per share (EPS) of 82 cents per share, up 55% year over year (YOY).
These numbers need some context. This was the last earnings report for General Electric as a conglomerate. In early April, the company spun off its energy unit, GE Vernova Inc. NYSE: GEV. However, this earnings report still included results from the Vernova business unit.
Meet GE Aerospace
Going forward, the company will report earnings as GE Aerospace under the same GE stock symbol. GE Aerospace will be a major aerospace stock and will house two business units: Commercial Engines & Services (CES) and Defense & Propulsion Technologies (DPT).
If you just look at GE Aerospace’s numbers, there’s still a lot for investors to like. The combined aerospace unit produced adjusted revenue of $8.1 billion, up 15% year-over-year. The aerospace division also achieved an operating profit margin of 19.1% and free cash flow (FCF) of $1.7 billion.
Aerospace orders totaled $11 billion in the quarter, up 34% year over year. It was also $2.9 billion higher than adjusted revenue.
For 2024, GE Aerospace raised its previous forecast for operating profit from $6.0 billion and $6.5 billion to $6.2 billion and $6.6 billion. The company also expects earnings in the range of $3.80 to $4.05 per share.
At its Investor Day in March, the company forecast $10 billion in operating profit by 2028 and a shareholder-friendly capital allocation framework that includes $15 billion in share buybacks and a dividend increase of 250%, initiated by the company in April.
Will positive earnings push GE Aerospace higher?
Turning to earnings, GE shares are up more than 50% over the past 12 months. This led many analysts to talk about a stock that was priced perfectly. While many analysts reiterated their buy (or overweight) ratings, price targets were moving lower. However, it is important to note that many of these lower price targets were still above the consensus price target of $160.07.
GE shares surged higher in early April following the dividend announcement. Since then, the stock has found resistance around the $157 level. The earnings report pushed the stock above this level. The question will be whether it can maintain these gains and make $157 a new support level.
The company’s results may not be considered perfect, but they could be close enough to confirm the stock’s bullish sentiment. As of this writing, GE analyst ratings on MarketBeat show no change in analyst sentiment. But this will be something investors will need to keep an eye on in the coming days and weeks.
Before you consider GE Vernova, you’ll want to hear this.
MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and GE Vernova wasn’t on the list.
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