GE's 4Q earnings was viewed positively by the market, but our text analytics of the earnings sentiment still shows a lack of answers regarding their troubled Power division, which still leaves the company weak relative to its industrial peers.
In November 2018, GE CEO Larry Culp told David Faber in a CNBC interview with respect to finding a bottom in the Power business: "We will know when we’re there."
GE shares were up more than 10% following the company’s Q4 earnings, prompting the question: are we there? The overall company-level analysis pointed to much-needed stabilization, but Q&A commentary on the Power segment still lacked a concrete path to improvement.
The outlook commentary lacked new negatives and helped drive a slight uptick in the Amenity Score to -4 compared to -10 in 3Q (see Exhibit 1). In addition our NLP platform showed that there was a significantly more constructive tone in the earnings call than in the 11/12/18 CNBC interview. However, on an absolute basis GE is still looking up at most of its Industrial peers (see Exhibit 2).
Outlook Commentary, GE (1/31/19):
GE’s Power segment has been a well-documented sore spot for several quarters. Consequently, much of the Q&A was dominated by discussion of the outlook for Power and when it might bottom. Amenity’s deception analysis flagged several answers about Power that were vague, indirect, and far from conclusive as to when results would bottom. A recent MarketWatch article highlighted similar commentary leveraging Amenity's NLP platform on GE's 3Q earnings call.
Power Commentary, GE (1/31/19):
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This communication does not represent investment advice. Transcript text provided by S&P Global Market Intelligence.
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