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Msg  7261 of 7297  at  7/26/2022 12:01:59 PM  by

jerrykrause


GE Earnings Crush Estimates, and the Stock Is Rising

 

GE Earnings Crush Estimates, and the Stock Is Rising

 

General Electric cruised by Wall Street's second-quarter earnings estimates. Full-year guidance was about as good as anyone could expect . Shares are up to start the day.

Tuesday morning, GE (ticker: GE) reported second-quarter adjusted earnings of 78 cents a share from $17.9 billion in sales. Wall Street was looking for EPS of 37 cents on sales of $17.8 billion.

Free cash flow came in at about $200 million, a little better than analysts had projected. For the full year, GE expects to generate roughly $4.5 billion to $5.5 billion in free cash flow. That's about $1 billion lower than prior guidance due to working capita pressures "as GE protects customers from the impact of supply chain challenges."

Bottom-line earnings per share for the full year are still expected to be $2.80 to $3.50 a share. That's been the full year guidance for months. GE, however, says it is trending toward the bottom end of that range. That isn't a big surprise. Wall Street had already cut GE earnings estimates to about $2.80 a share after a weak first quarter coupled with the slowing global economy.

GE shares were up almost 4% shortly after results were released. S&P 500 and Dow Jones Industrial Average futures were down 0.4% and 0.5%, respectively.

Investors seem relieved with Q2results. "The GE team delivered a strong second quarter with growth in orders, revenue, and profit, as well as positive free cash flow," said CEO Larry Culp in the company's news release.

Aerospace sales and operating profit bounced back. Revenue rose 27% year over year. Operating profit came in at $1.1 billion, up from $908 million reported in the first quarter of 2022.

Operating profit margins at GE Healthcare bounced back as well. The health unit delivered second quarter operating profit and profit margins of $651 million and 14.4% respectively. First quarter operating profit and profit margins disappointed investors at $538 million and 12.3%, respectively.

GE's renewable power business continues to lose money. The second quarter operating loss came in at $419 million, about the same level as the first quarter loss of $434 million.

Investor expectations coming into Q2 were low. Shares of GE dropped about 30% in the second quarter. The S&P 500 dropped about 16% and industrial stocks in the S&P dropped about 15% on average in those same three months. And shares dropped more than 10% after the company reported first quarter numbers.

Options markets imply the stock will move 6%, up or down, after the numbers are released. Shares dropped 10.3% after the first-quarter report. Shares have moved 5%, up or down, on average over the past four quarterly reports. They have risen twice and fallen twice.

Coming into Tuesday trading, GE stock is down 28% this year. The S&P 500 and Dow Jones Industrial Average are off 17% and 12%, respectively, over the same span.

GE hosts a conference call at 8 a.m. eastern time to discuss results.

 


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