NEW YORK—General Electric Co. reports third-quarter earnings on Friday before the market opens.
For GE, size has always mattered. Its mammoth industrial reach has helped stabilize the company through generations of boom and bust. When the banking crisis sapped revenues across its financial division, for example, GE leaned on its vast portfolio of industrial projects. This year was the reverse -- a rebound on the banking side offset a weaker manufacturing business.
Increasingly, however, analysts say investors have grown tired of the do-everything business model. While GE has increased profits for the past three quarters, its stock has underperformed, lagging its S&P peers by 42 percent, said Joel Levington, a corporate credit analyst with Brookfield Investment Management Inc.
"What do you want to be when you grow up?" Levington said. "That's my question for GE."
Diversity can work both ways, he said. Running a variety of businesses might help GE survive, but it doesn't necessarily help the company grow.
WHAT TO WATCH FOR: Investors are looking for signs that GE can match the same focused growth of its smaller industrial rivals. That didn't happen last quarter. GE's energy and technology businesses reported a 3 percent drop in profit in the April-June period. Meanwhile, Medical and industrial instruments maker Danaher Corp.'s quarterly earnings jumped 74 percent, while United Technologies posted a 19 percent gain.
WHY IT MATTERS: Because of its size, GE's financial performance is considered a bellwether for the economy. GE Capital is active in everything from credit cards to lending for office space. Its industrial side builds everything from refrigerators to jet engines to MRI machines.
WHAT'S EXPECTED: Analysts expect earnings of 31 cents per share on revenue of $34.8 billion, according to FactSet.
LAST YEAR'S QUARTER: In the same three-month period last year, GE reported net income of $2.06 billion, or 18 cents per share on revenue of $35.9 billion. That quarter marked a turnaround for its equipment and service businesses, with orders increasing for the first time in two years.