Financial analyst in the financial market
December 10th, 2011
Analysts expect.
Investors will be eyeing GE Co. this morning when the conglomerate that makes everything from jet engines to light bulbs reports first-quarter results, setting the tone on a day stacked with economic and earnings news.
To the extent that the industrial giant is considered a proxy for the U.S. economy, GE’s numbers could cast a warm glow over markets.
Analysts expect GE’s profit to rise 17 per cent, to 37 cents (U.S.) a share from 32 cents a year earlier, according to Thomson First Call. Revenue is seen climbing 14 per cent, to more than $38-billion from $33.3-billion last year.
Under chief executive officer Jeff Imelt, GE has beefed up its health care and media holdings with a string of acquisitions, including the 2003 purchase of Vivendi Universal Entertainment, which it merged with its NBC unit.
In March, GE reduced its exposure to insurance by cutting its stake in Genworth Financial Inc. to 51 per cent from 70 per cent, raising about $2.9-billion to pump into its financial services arm, GE Capital.
GE’s moves will start bearing fruit soon, analysts say. “In short, GE’s stars are lining up very well for sustained, above-average fundamental performance at a time when the overall outlook for the global economy appears likely to slow,” Prudential Equity Group’s Nicholas Heymann said in a note to clients.
William Blair analyst Jeffrey Germanotta also sees good things ahead. “We believe the best is yet to come for GE with the energy business expected to show a positive inflection point in 2005,” he said.
Others are equally bullish. Of 22 analysts surveyed by Bloomberg, only three have a “hold” recommendation on the shares. The rest have a “buy” or equivalent rating.
Much of the good news might already be reflected in the stock price, which has climbed 15 per cent in the last 12 months. The shares have been hovering between $35 and $36 for most of 2010 — about the same level they traded at three years ago.
Given GE’s importance as a barometer of earnings, any surprises — positive or negative — could ripple through the broader market.
Financial services
Others reporting today include fellow Dow Jones industrial average component Citigroup Inc., toy maker Mattel Inc., financial services provider Wachovia Corp. and media companies Knight-Ridder Inc. and Tribune Co.
Investors have a full plate of economic releases to digest as well, including U.S. industrial production figures and import prices for March, and the Empire State Manufacturing Survey and preliminary University of Michigan Consumer Sentiment index for April.
In Canada, the focus will be on manufacturing shipments data for February, which will probably bear scars from the strong dollar. Shipments are expected to slip 0.5 per cent, giving back some of January’s 3-per-cent gain, according to the median forecast of economists surveyed by Bloomberg.
January’s hefty rise was most likely an aberration, economists say.
“Some of the increase was attributed to an earlier shortage of parts at heavy truck manufacturers, while the aerospace industry, a notoriously volatile component, saw a particularly large gain,” said Bank of Nova Scotia economist Adrienne Warren.
The Canadian economy will also be front and centre this afternoon, when Bank of Canada Governor David Dodge speaks to the Canadian Association of New York on the topic, How Canada is Adjusting to Global Economic Forces.
Unless Mr. Dodge deviates from the script in yesterday’s monetary policy report, economists expect little market reaction to the speech.