On Friday, General Electric kicks off a string of earnings reports from the industrial sector and investors will be all ears; listening to hear how brutally the global downturn is pounding the industrial sector.
"I’m looking to see if GE will report profit on a pre-tax basis," says Oppenheimer’s Chris Glynn. "And I'm expecting equipment orders will be down,” he adds. “But the key will be what happens on the services side.”
Analysts on average expect General Electric earnings to fall 52 percent on a per-share basis, according to Reuters Estimates
Although GE’s results will be widely followed results from Caterpillar next week could provide a particularly stark illustration of the sector's hardship, with most analysts predicting the world's No. 1 maker of building equipment being the first blue-chip industrial to report a quarterly loss in this downturn.
Wall Street is also bracing for ugly first-quarter reports from top industrials United Technologies and 3M, both expected to be hard hit by the global slowdown. Analysts anticipate a 23 percent drop in profit at United Technologies and a 38 percent drop at 3M.
With expectations so low, attention will be focused on any forecasts the companies provide that hint at either continued deterioration in end markets or any early signs of stabilization.
The pace of new orders will be critical, they’re a signal about the reliability of companies' order backlogs -- and pricing will also be another key issue.
"The question everybody's trying to answer is when do we reach the trough? Is it late in 2009 or will it be 2010?" says Matt Collins, capital goods analyst at Edward Jones. "When you look at consensus, analysts are looking for growth to resume in 2010 and I think investors will be looking for signs that might happen."
To find out how Oppenheimer’s Chris Glynn recommends trading GE please watch the video above.
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Trader disclosure: On Apr. 16th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (FCX), (GE), (RIG), (TCK); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (UNH), (MSFT), (RIG), (PBR), (CSCO); Finerman's Firm Owns (WFC) Preferred; (C) Preferred; (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Is Short (BAC), (WFC), (MDY), (SPY), (USO), (IWM), (IJR), (C); Najarian Owns (BX) Call Spread; Najarian Owns (PALM); Najarian Owns (RIO) Calls; Najarian owns (VAR) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (NTAP)
Oppenheimer & Co. Inc. expects to receive compensation for investment banking services from (GE)
