Just when General Electric's (NYSE:GE) turnaround seemed to be gaining steam earlier this year, the COVID-19 pandemic crushed its results. Indeed, the pandemic negatively impacted nearly every part of the storied industrial conglomerate's business.

That said, there are signs that the worst of the crisis may have passed for General Electric. The company's third-quarter earnings report this week will include important information that should help investors gauge whether GE is truly getting back on track.

Looking for signs of normalization in the core business

Three months ago, GE reported a 20% organic revenue decline for its industrial businesses. The aviation unit was hit hardest, with revenue down 44% year over year organically. Aircraft manufacturers slowed production (reducing sales of jet engines), while airlines dramatically reduced flight activity, leading to lower service revenue. The company also reported organic revenue declines of 9% for the power segment and 4% for its healthcare unit, as some power projects were delayed and hospitals performed fewer medical procedures due to COVID-19.

GE's renewable energy segment did grow organic revenue 1% year over year, but that compared to 28% organic growth in the first quarter. This business experienced project delays similar to those at GE Power.

The third-quarter report will give investors insight into whether power and renewable energy projects that were delayed from the second quarter are starting to move forward again. Meanwhile, the volume of elective medical procedures has been trending upward, which is a good sign for GE Healthcare. And while the aviation business won't recover as quickly, airlines have been ramping up their schedules compared to the spring, which likely drove sequential improvement in service revenue.

A GE gas turbine

Image source: General Electric.

Investors should also pay close attention to GE's outlook and commentary for the fourth quarter. Last month, CEO Larry Culp said that the company was on track to generate positive industrial free cash flow in the second half of 2020, after burning $4.3 billion on that basis in the first half of the year. However, Europe and the U.S. have both suffered a worrisome rise in COVID-19 cases in recent weeks. Management will likely address any potential business impacts from rising case numbers during the Q3 earnings call.

Two major checkups at GE Capital

General Electric is also set to provide two important updates related to its GE Capital subsidiary this week. First, it undertook a full review of its GECAS aircraft-leasing unit's portfolio last quarter. In the Q2 earnings report, it recorded impairment charges of approximately $300 million based on a review of leases and GECAS customers it viewed as higher risk. The full review could potentially lead to additional impairment charges.

Second, GE completes the annual review of its insurance business for potential premium deficiencies during the third quarter. This is a closely watched exercise, particularly after GE announced a massive $9.5 billion charge related to its insurance business in early 2018. Last year, the review led to a $1 billion pre-tax charge, mainly due to the impact of lower interest rates. Interest rates have fallen further over the past year, increasing the likelihood of another charge this year.

The pandemic is a big wild card, though. Three months ago, Culp noted that GE was seeing fewer new long-term care claims and an increase in policy terminations. If those trends continued, they could potentially offset (or more than offset) the headwind from lower interest rates.

Is GE ready to deploy more cash?

General Electric ended the second quarter with over $41 billion of cash after reaping a big windfall from the $21 billion sale of its biopharma unit earlier this year. The company has been carrying more cash than usual due to the uncertainty associated with the pandemic.

However, if the insurance review doesn't turn up any big red flags and business conditions for GE's industrial segments seem more stable, the company may start deploying some of its excess cash. Some of the $16 billion held at GE Capital will be needed to meet that unit's $5 billion of debt maturities in the second half of 2020. Earlier this year, GE also planned to make a $4 billion to $5 billion pension contribution and pay down the balance (now $4.7 billion) of an intercompany loan from GE Capital to the industrial side of the business.

If GE goes ahead with those actions or other deleveraging moves, it should give investors confidence that the company is finding its financial footing again. By contrast, if GE continues to hoard cash, it would indicate that management remains nervous about the business environment.