General Electric (GE) and Raytheon Technologies (RTX) reported better-than-expected fourth-quarter earnings Tuesday, but revenue and 2022 guidance came up light. GE stock tumbled while Raytheon was little changed.
Fellow aviation and defense stock Textron (TXT) follows on Thursday.
GE is seeing momentum as the key aviation segment recovers “and strengthen our end markets,” CEO Larry Culp said in a release. But the company flagged commodity price inflation and supply-chain disruptions. Analysts expect those pressures to last through at least the first half of 2022.
General Electric Earnings, GE Stock
Estimates: Early Tuesday, Wall Street forecasts GE earnings of 85 cents per share, up 32%, on revenue of $ 21.308 billion, down 3%, according to FactSet.
Results: GE earnings jumped to 92 cents, but revenue fell 3% to $ 20.303 billion. Q4 revenue fell 4% in health care; 5% in renewable energy; and 10% in power. It rose 4% in aviation.
Orders were down 4% in Q4 but rose 12% for the full year.
Outlook: GE sees adjusted EPS of $ 2.8- $ 3.50 for 2022, below analyst consensus. The company cited inflationary pressures. It also expects revenue growth in the high single digits and free cash flow to more than double to $ 5.5 billion- $ 6.5 billion, driven by strength in power and health care.
The 2022 outlook assumes continued recovery in aviation, and improvements in the other industrial segments, offset by some adverse impact in onshore wind.
Shares sank 6.4% in the stock market today. On Monday, GE stock edged up 0.6% to 96.91 rebounding from session lows but well off a 116.27 buy point. GE stock undercut the 50-day line amid last week’s broad sell-off. The stock’s relative strength line has improved so far this year, according to MarketSmith chart analysis, after turning up from a long-term downtrend.
GE announced plans in November to divide into three publicly traded companies. It will emerge as aviation play under the General Electric name in 2024, after spinning off its health care and power, including renewable energy, businesses.
Raytheon Technologies Earnings, Raytheon Stock
Estimates: Analysts expected Raytheon earnings to jump 38% to $ 1.02. Sales were seen rising 4% to $ 17.295 billion.
Results: Raytheon earnings came in at $ 1.08 a share while sales were at $ 17 billion. Sales fell 2% at Intelligence & Space; 8% at Missiles & Defense. But sales rose 13% at Collins Aerospace and 15% at Pratt & Whitney.
Outlook: Raytheon sees 2022 adjusted EPS of $ 4.60- $ 4.80 with revenue of $ 68.5 billion- $ 69.5 billion, both below analyst targets.
Raytheon stock were roughly unchanged Tuesday. Shares of the aviation pure play rose 1% to 88.12 on Monday, after undercutting the 50-day and 200-day lines intraday. Raytheon stock is working on a 92.48 high handle entry. And even in the midst of a recent decline, the stock’s RS line is improving.
Textron Earnings, Textron Stock
Estimates: Early Thursday, analysts expect Textron earnings to fall 10% to 95 cents. Sales are seen falling 6% to $ 3.435 billion.
Results: Check back later in the week.
TXT stock fell 2.3% Tuesday. Shares inched up 0.4% to 71.89 on Monday, recovering from an intraday drop below the 200-day. On Friday, the stock triggered the automatic sell rule by falling more than 8% below a 78.23 buy point, following a breakout attempt in early January.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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