GE stock soars after earnings
Posted by langegroup on October 31st, 2019
In the aftermath of Wednesday’s third quarter earnings from G.E investors sent the share price upwards 7% pre market. The company posted results showing modest incremental progress on its turnaround under current CEO Larry Culp. It is not by any means huge progress, however after two years of negative press at G.E it could be the start for the bulls to take control, given that Culp is not slashing guidance and failing to deliver on the promises of positive cash flow for the company.
With a company like G.E and the position they have been in over the last 2 years, small incremental progress is a huge win for the company. After adjustments, G.E’s earnings came in well above analysts’ estimates at 15 cents, compared to 11 cents. The company also beat estimates in revenue with total revenue of .36 billion, compared with estimates of .93 Billion.
CEO Larry Culp said in a statement regarding the company’s third quarter financials “Our results reflect another quarter of progress in the transformation of GE. We are encouraged by our strong backlog, organic growth, margin expansion, and positive cash trajectory amidst global macro uncertainty.” While there was a lot of positive sentiment regarding the company including the changes the company are making under Culp’s guidance there also were some negatives.
In the company’s power business, G.E saw a decline in orders by over 30% which was almost expected as the dwindling power business has been named the problem child by Wall Street analysts. The power sector operated with a loss of 4 million this quarter, which in compared to last year’s losses of 6 million was a marked improvement.
The company also saw a few minor setbacks in their renewable energy department, with losses sitting at million, however seeing a 13% revenue increase. G.E addressed this by blaming “higher losses on legacy contracts, pricing (although stabilizing at the orders level), tariffs, and increased R&D investment, partially offset by cost productivity and strong volume.”
Simon Gross – Lange group
info@langegroup.com
