June 4, 2023

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GE shares rise as GE earnings unexpectedly rise, free cash flow positive

GE shares rise as GE earnings unexpectedly rise, free cash flow positive

General Electric stock rose early Tuesday General Electric (GE) reported an unexpected rise in second-quarter earnings and challenged views of further cash burn. Before the opening, GE stock rose, indicating a move above a key level.


General Electric profits

Estimates: The industry symbol was expected to post a 6.5% decline in EPS to 37 cents, according to FactSet, as comparisons a year ago became more difficult. Revenue rose 3.2% to $17.457 billion.

GE was likely to burn $806.4 million in cash, a slight improvement from negative free cash flow of $880 million in the first quarter. GE’s cash flow is traditionally stronger in the second half of the year.

consequences: General Electric’s earnings unexpectedly jumped to 76 cents a share. Adjusted revenue increased to $17.88 billion. Free cash flow reached $162 million, defying views to burn money.

prospects“We continue to head toward the lower end of our 2022 forecast on all metrics except cash, which is lower due to the timing of working capital and renewable energy-related demands,” CEO Lawrence Kolb said in GE’s earnings statement.

In April, it directed GE to the lower end of its previous 2022 guidance, which includes EPS of $2.80 to $3.50 and FCF (free cash flow) of $5.5 billion to $6.5 billion.

Analysts expected GE’s profit to rise 62% to $2.77 for the full year 2022, although that was before the second-quarter win.

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GE stock

Shares are up nearly 5% before opening on Tuesday stock market trading. GE stock rose 0.25% to 68.36 Monday, extending GE’s winning streak to seven sessions after hitting a 20-month low earlier this month.

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GE stock It jumped 8.5% last week, closing just below the 10-week moving average and well below the 40-week average.

GE stock is on track to move above the 50-day and 10-week lines on Tuesday. GE has rarely traded above the 10-week support level since the short breakout failed last November.

The line relative force For GE stocks, it shows a significant lag, a sign of underperformance vs. Standard & Poor’s 500.

Historic GE Split, “Wall Of Worry”

On July 18, General Electric She emphasized that the historical division is still on the right track The three public companies due to appear in 2023-24 are named: GE Aviation, GE HealthCare and GE Vernova (which includes energy and renewable energy companies). General Electric first announced the big meltdown last fall, after years of costly restructuring efforts. Investors also fell in love with the conglomerate business model.

Likes Raytheon Technologies (RTX), the new GE will focus on aviation. Raytheon and 15:00 (MMM) also reported early Tuesday.

Among its peers, Raytheon stock rose 0.4% Monday. 3M’s stock is virtually unchanged. Roper Technologies (Royal Oman Police) rose 0.6%.

GE and Raytheon make jet engines for aircraft makers like Trappers Boeing (BA), which issued aircraft orders at the Farnborough International Air Show last week. Boeing reports early Wednesday.

In a July 13 note to clients, RBC Capital Markets analyst Deane Dray wrote that second-quarter earnings from the multi-industry companies will focus on any change in orders or comments.

“The wall of anxiety continues to rise, bolstered by inflation concerns, supply chain disruptions, worsening chip shortages, the China Covid shutdown, the Russia-Ukrainian war, Fed tightening, and a stronger US dollar,” said Dray.

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The possibility of a recession is also trending upwards, the analyst added. “ISM continues to slow, with June’s ISM manufacturing index continuing to expand, but new orders slipped below 50 for the first time since May 2020,” he said.

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