Summary
- The management team at General Electric is due to report financial results for the third quarter of the company's 2020 fiscal year.
- Investors should keep an eye out on the company's two major segments, Aviation and Power.
- One big area of likely disappointment will be the firm's backlog.
- Investors should watch for any development regarding the SEC investigation that's taking place right now.
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On Oct. 29, the management team at General Electric (GE) is expected to release financial results for the third quarter of its 2020 fiscal year. As we near that time, and especially during a year where the company, its industries, and the broader economy have all suffered from the COVID-19 pandemic, investors are likely worried about what the future holds. Given the uncertainty, there really is no telling what will transpire when the company does report, but it would be wise for investors to keep an eye out on a few key issues that will go a long way toward determining the industrial conglomerate’s health.
Watch Aviation and Power
Though General Electric has multiple operating segments, its two key lines of business are Aviation and Power. Aviation deals largely with the construction and sale of plane engines, most notably these days the LEAP. For years, this segment has proven to be the crown jewel of the conglomerate, generating strong sales growth while boasting robust margins. Catering to both the commercial and military aviation markets, it seemed unlikely the segment would ever suffer a downturn, but the COVID-19 pandemic, combined with the grounding of the Boeing (BA) 737-Max aircrafts, created the perfect storm for the firm.
In the latest quarter, revenue for Aviation was $4.38 billion. This was down 44% compared to the $7.88 million seen the same time last year. A loss of $680 million (due in large part to non-cash charges) was worse than the $1.39 billion seen in the second quarter of the business’ 2019 fiscal year. For the first full half of 2020, revenue of $11.28 billion was below the $15.83 billion seen in 2019, while a net profit of $325 million fell far short of last year’s first half profit of $3.05 billion.
