General Electric stock climbs on third quarter earnings, outlook rises

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General Electric Co (GE) – Get the report from General Electric Company (GE) released stronger than expected third quarter results on Tuesday and raised their full year earnings outlook, but downgraded their industrial cash flow forecast in the face of “challenging operating environments” and “global supply chain disruptions.”

GE said the biggest damage in the supply chain has occurred in its health department and expects the disruption to persist for at least the first half of next year, along with a “more challenging” inflationary environment.

However, for the three months ended September, General Electric said adjusted non-GAAP earnings were 57 cents per share, an 18.75% increase over the same period last year and 14 cents ahead of Street’s consensus forecast. Consolidated sales fell 1% to $ 18.4 billion, according to General Electric, well below analyst estimates of $ 19.251 billion.

Looking at the final months of the year, GE said it expects earnings in the range of $ 1.80 to $ 2.10 per share – compared to its previous guidance of $ 1.20 to $ 2.00 – and its forecast for industrial free cash flow at $ 3.75 billion and $ 4.75 billion, compared to its previous estimate of $ 3.5 billion and $ 5 billion.

“The GE team delivered another strong quarter. Orders grew, margins rose, our overall cash performance was significantly better, and aviation is picking up momentum and showing continued signs of recovery, ”said CEO Larry Culp, pressure on the wind market from the US production tax credit. Against this background, we are raising our EPS expectations for 2021 and narrowing our outlook for free cash flow for the full year. ”

“Our progress in strengthening our balance sheet and business enables us to add long-term growth and value in our businesses,” he added. “With leading positions in our markets, we provide our customers with essential equipment and services that will shape the future of flight, advance precision health and lead the energy transition. We’re staying on track to achieve high single-digit free cash flow margins over time. ”

General Electric’s shares traded 4.7% higher in early trading immediately after earnings were posted, changing hands at $ 110.28 each.

GE stock has had input costs to the industry since its split-adjusted price was introduced on the 2nd.

JPMorgan analyst Stephen Tusa, a longtime GE skeptic who has a “neutral” rating with a target price of $ 55 on the stock, said earlier this month that a weakening of short-term fundamentals would make the industrial giant’s longer-term anchors “more bullish” power.

He also suggested that the recent portfolio moves, as well as the appointment of a new CEO at GE Healthcare earlier this summer, represent a “plan b” for the company as it moves into a more challenging macroeconomic environment in the final months of the year.

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