General Electric trades 10.3% higher following the upbeat quarterly performance results

on Jan 30, 2020
Updated: Mar 11, 2020
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  • General Electric beats analysts estimates for earnings and revenue in the fourth quarter.
  • GE gained 10.3% on Wednesday following the upbeat performance results.
  • GE reported the industrial free cash flow at $2.3 billion in 2019.

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General Electric (GE) announced the fourth quarter performance results on Wednesday that beat analysts’ estimates for earnings and revenue. The earnings report further highlighted better than expected forecast for cash flow that further strengthened the performance outlook for the American multinational.

Following the quarterly results, GE was seen trading 10.3% higher in the stock market. At around $13 per share, the stock printed a massive 51% increase in almost a year. The current level also marks the highest for GE since October 2018.

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General Electric’s Figures Versus Analysts’ Estimates

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According to Refinitiv, analysts had anticipated $25.57 billion in revenue for General Electric in the fourth quarter. Experts had also expected 18 cents of earnings per share for the company in the recent quarter. Beating the estimates on both fronts, the company announced $26.24 billion in revenue on Wednesday while the EPS (earnings per share) was recorded at a higher 21 cents per share.

GE uses the industrial free cash flow (FCF) metric as a gauge of efficiency. Beating the company’s own guidance of $2 billion cap on FCF, the earnings report highlighted $2.3 billion of free cash flow for GE in 2019. Following the performance results, the Bank of America gave a strong buy rating to GE’s stock. Analyst Andrew Obin also expressed his confidence that the company will sustain the optimism in the upcoming quarters.

Stephen Tusa of JPMorgan, on the other hand, who is known as the top industrial analyst, reiterated his underweight rating on GE’s stock. He appreciated the upbeat quarterly results but recommended caution hinting there a lot is yet to revealed.

General Electric’s Forecast For Fiscal 2020

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In fiscal 2020, the company now expects to make 50 to 60 cents of earnings per share. The forecast came out lower than the analysts’ estimate of 67 cents per share for General Electric in 2020, as per FactSet. On the industrial cash flow front, the company anticipated $2 billion to $4 billion this year. The FCF estimate was much higher than the $1.2 billion that analysts are expecting in 2020. Following the earnings report, the Bank of America also upgraded its FCF forecast for GE to $4.8 billion in 2020.

General Electric’s performance in the stock market in 2020 so far has been fair. Opening at around $11.90 in January, the company noted an almost 1% growth this month.

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