General Electric Q1 2025 Earnings Preview: Navigating Restructuring with Momentum

General Electric (GE) approaches its Q1 2025 earnings report amid a pivotal period of strategic transformation. As the company prepares to split into three independent entities—GE Vernova (power and renewables), GE Health (healthcare), and GE Aerospace (aviation)—by 2025, investors will scrutinize how its restructuring efforts impact near-term financials and long-term growth.

Ask Aime: How will GE's strategic transformation impact its Q1 2025 earnings and long-term growth prospects?

Earnings Preview: Balancing Growth and Restructuring

Analysts project GE to report Q1 2025 EPS of $1.27, a 54.86% year-over-year increase compared to $0.82 in Q1 2024. This optimism stems from strong performance in high-margin segments like aerospace and healthcare, which are expected to drive growth post-restructuring. However, revenue estimates for the quarter have dropped sharply to $9.05 billion, a 40.37% decline from $15.17 billion in Q1 2024. This contraction reflects the strategic divestiture of non-core assets and the gradual spin-off of segments, which may temporarily suppress top-line figures.

Recent Performance and Momentum

GE has delivered consistent earnings surprises in recent quarters. In Q4 2024, it beat estimates by 26.9%, reporting EPS of $1.32 versus a consensus of $1.04. This beat was fueled by strong order growth in GE Vernova’s power and electrification divisions, as well as cost discipline across all segments. For the full year 2024, GE’s EPS reached $4.60, and analysts now project $5.42 for 2025, with a further rise to $6.40 in 2026—a 18% jump from 2025 levels.

Operational Highlights: Spin-offs and Strategic Priorities

The planned split into three companies has intensified focus on high-growth sectors:
- GE Vernova: Aims to generate $36–$37 billion in 2025 revenue, supported by surging orders in electrification (up 118% year-over-year in Q4 2024) and renewable energy. The division declared a $0.25 quarterly dividend, signaling confidence in cash flow.
- GE Aerospace: Benefits from the global aviation recovery, with strong demand for engines and services.
- GE Health: Targets innovation in diagnostics and imaging, backed by $2–$2.5 billion in 2025 cash flow from its healthcare business.

Meanwhile, Portland General Electric (PGE), a former GE subsidiary now a standalone entity, reported 2025 earnings guidance of $3.13–$3.33 per share, driven by investments in grid modernization and renewable energy projects like the 75 MW Constable Battery Energy Storage System.

Valuation and Investor Sentiment

GE’s valuation reflects optimism about its post-split trajectory. Its trailing P/E of 52.4 and forward P/E of 40.05 suggest investors are pricing in future growth. Analysts’ average 12-month price target of $219—up from its current $177.84—aligns with expectations for margin expansion and sector dominance.

Risks and Considerations

While momentum is strong, challenges persist:
- Revenue Volatility: The spin-offs could lead to short-term revenue declines, as seen in Q1 2025 estimates.
- Execution Risks: Successfully separating three complex businesses without operational disruption remains a hurdle.
- Regulatory and Climate Pressures: PGE’s wildfire mitigation costs ($57–$78 million in capital spending for 2025) and GE’s carbon neutrality goals by 2030 require sustained capital allocation.

Conclusion: A Transition with Clear Upside

General Electric’s Q1 2025 earnings will serve as a critical checkpoint for its transformation strategy. While revenue may lag due to restructuring, the 54.86% EPS growth underscores the profitability of its core segments. With $6.40 EPS projected for 2026, a $219 price target, and a 1.71 PEG ratio indicating growth alignment with valuation, GE appears positioned to reward investors who focus on its long-term vision.

The spin-offs into three independent entities—each with distinct growth drivers—create a compelling narrative for sector-specific investors. As GE exits coal-fired power and doubles down on renewables, aerospace, and healthcare, its ability to execute on these transitions will determine whether it can sustain momentum beyond Q1 2025. For now, the data suggests a cautiously optimistic outlook, with risks balanced by a clear path to higher margins and innovation-led growth.