Is GE stock a buy or sell as earnings and free cash flows exceed expectations?

On Tuesday, General Electric Co. (NYSE:GE) shares advanced by nearly 3% after announcing its most recent quarterly results. The company reported its fiscal third-quarter results before markets opened, beating analysts expectations on earnings and free cash flows. However, its revenue declined significantly, missing estimates.

The company posted non-GAAP earnings per share of $0.57, beating the average for analyst expectations of $0.44. In addition, its GAAP EPS of $0.54, was $0.36 ahead of estimates while revenue for the quarter declined by 5.2% from the same quarter last year to $18.4 billion, $770 million below Street forecasts.

On the other hand, GE’s industrial free cash flow of $1.7 billion smashed the consensus Street estimate of about $1 billion, also narrowing its FCF forecast for FY2021 to the range of $3.75-$4.75 billion, from $3.5-$5 billion, previously.

Time to bet on GE’s earnings growth?

From an investment perspective, General Electric shares trade at a steep P/E ratio of 183.77, and a reasonable P/E of 25.97. Therefore, value investors may choose to monitor the company’s performance before buying the stock.

However, with analysts expecting its EPS to skyrocket by 2,537% this year, before rising by a further 109% next year, the stock could be an exciting option for growth investors.

Therefore, although the stock is up more than 82% over the last 12 months, long-term investors could still find it as an exciting option for their portfolios.

Technically, General Electric shares seem to have recently spiked to complete an upward breakout from a sideways channel formation. However, the stock is yet to reach overbought conditions, leaving room for more upward movement.

Therefore, investors could target extended gains at about $110.51, or higher at $113.95, while $104.51 and $100.92 are crucial support levels.

It may not be too late to buy GE stock

In summary, although General Electric shares have recently spiked to break out of a sideways channel, the stock is yet to reach overbought conditions. Moreover, its exciting earnings growth could drive the price higher.