Should I buy General Electric shares before Q3 results?

General Electric Company (NYSE: GE) is scheduled to announce third-quarter earnings results on Tuesday, October 26, before the market open. General Electric shares continue to trade above the current support level at $100 while J.P. Morgan’s analyst Stephen Tusa sees some risks.

The business is improving

General Electric (GE) is an American company that operates through the following segments: healthcare, power, aviation, renewable energy, digital industry, additive manufacturing, and finance.

General Electric will announce third-quarter earnings results next week, and according to estimates, the company should post strong earnings results.

General Electric expects to earn an adjusted $0.50 a share for the third quarter, and according to the company’s management, execution is improving driven by a rebound in the overall economic activity, as global Covid-19 vaccination rates continue to rise.

General Electric’s third-quarter revenues should be around $19.4 billion even though the aviation segment remains under pressure. Aviation business has been a drag on its revenue growth last several quarters; still, aviation revenues were up 10% in the second quarter compared with the first quarter, and they are expected to trend higher in the third quarter as well.

General Electric has proven improvements throughout the second quarter of 2021; total revenue has increased by 8.9% Y/Y to $18.3 billion, while the GAAP EPS was -$0.07.

General Electric raised its industrial free cash flow range to $3.5 billion–$5 billion (prior guidance was $2.5 billion–$4.5 billion and reported that industrial revenues should grow organically in the low-single-digit range.

During the last several months, the company’s momentum reflects improved market conditions, but J.P. Morgan’s analyst Stephen Tusa said last week that GE shares are at least 20% overvalued. Stephen Tusa added:

General Electric stock should still be avoided given its high expectations and “limited intrinsic value.” General Electric screens poorly on almost any of the factors we are measuring for and faces a higher risk to the outlook if the company fails to live up to such high expectations when it discloses Q3 results on October 26.

Stephen Tusa’s new $55 target is still nearly halfway below current levels, and probably it is not the best moment for buying General Electric shares.

$100 represents the current support

Technically, General Electric shares could advance above the current price levels if the company posts strong third-quarter results, but the current price does not represent a good entry point for long-term investors.

Data source: tradingview.com

General Electric shares continue to trade above the current support level at $100, and if the price jumps above $110 resistance, the next target could be $115. On the other side, if the price falls below $90 support, the next target could be at $80 or even below.

Summary

General Electric is scheduled to announce third-quarter earnings results on Tuesday, October 26, before the market open. General Electric shares remain in a bull market, but J.P. Morgan’s analyst Stephen Tusa said last week that GE shares are at least 20% overvalued.

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