Skip to Content
US Videos

Power Business Continues to Vex GE

There were few surprises in GE's second-quarter update as anticipated weakness in the power segment weighed.

Mentioned:

Joshua Aguilar: Narrow-moat GE reported second-quarter earnings today that revealed little surprises, in our view. We're not making any changes to our fair value estimate. We're primarily concerned with anticipated weakness at power, which continues to vex the firm. First-half trends continue to indicate a gas power market of less than 30 gigawatts in 2018. Segment profits of $694 million for the first half of the year are at a run rate in line with our 2018 projections. Our primary concern from a long-term perspective is the attractiveness of renewables from a levelized cost of energy. There are no quick fixes here; after healthcare and oil and gas separates, power will continue to be a greater portion of the firm and these problems aren't going to go away anytime soon.

As for aviation, the firm's crown jewel, revenues rose to $7.5 billion, a 13% year-on-year increase from last year. LEAP engine deliveries are now only about four-plus weeks behind schedule compared to seven weeks previously in the early part of the year. CFM representatives are confident that the joint venture with GE and Safran will meet its target to deliver 1,100 LEAP engines by the end of the year. New engines are sold at a loss, so we would anticipate decreased profitability in aviation at the back half of the year.

Joshua Aguilar does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.