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General Electric reported Q1 EPS of $0.24, $0.05 better than the analyst estimate of $0.19. Revenue for the quarter came in at $17 billion versus the consensus estimate of $16.91 billion.
GE stock was hit the most on commentary that it expects its full-year earnings at the lower end of its previous forecast range as supply chain challenges and higher freight and raw material costs weighed on the company.
The coronavirus pandemic gave rise to global supply chain disruptions and drove costs, making it difficult for companies and manufacturers to produce enough to match the demand. Furthermore, the latest COVID-19 waves in some countries and Russia’s invasion of Ukraine have additionally worsened the already bad circumstances.
“We’re holding the outlook range we shared in January, but as we continue to work through inflation and other evolving pressures, we’re currently trending toward the low end of the range,” said Larry Culp, CEO of General Electric.
In its previous forecast, the conglomerate said it expects full-year adjusted profit to range between $2.80 and $3.50 per share, and estimated its profit margin to rise by 150 bps as well as generate $5.5 billion to $6.5 billion in free cash flow.
Wolfe Research analysts viewed GE’s update to its 2022 outlook as “disappointing, but not surprising.”
“We believe the biggest swings to guidance remain the extent of Renewables losses and the pace of recovery in Healthcare margins,” analysts wrote.
Goldman Sachs analyst Joe Ritchie said that results provided “something for both the bulls and the bears to point to.”
“We expect the 2022 to 2023 EBIT/FCF bridges to be the focus of the call and believe the shares will likely underperform on this result,” the analyst said in a note.
By Senad Karaahmetovic
