General Electric Shares Surge on Full-Year Cash Flow Guidance, Better-Than-Expected Quarterly Earnings

10:50 AM, Oct 30, 2019 — General Electric (GE) shares surged in early trading on Wednesday after the industrial conglomerate raised its industrial free cash flow guidance and affirmed its earnings outlook for the full year after its third-quarter earnings beat expectations.

Boston-based GE said it now expects industrial free cash flow for 2019 to be flat to up $2 billion, up from its previous guidance of down $1 billion to up $1 billion. It still expects adjusted per-share earnings between $0.55 to $0.65. The consensus compiled by Capital IQ is for $0.60.

For the quarter ended Sept. 30, adjusted per-share earnings rose to $0.15 from $0.11 in the prior-year period and above the Street’s view for $0.12. Total revenue slid to $23.36 billion from $23.39 billion the year before.

GE shares were nearly 13% higher in morning trading.

“Our results reflect another quarter of progress in the transformation of GE,” said Chief Executive H. Lawrence Culp. “We are encouraged by our strong backlog, organic growth, margin expansion, and positive cash trajectory amidst global macro uncertainty.”

Culp said the company lifted its industrial free cash flow outlook for the year despite “external headwinds” due to the grounding of Boeing’s (BA) 737 Max jetliner and tariffs.

Revenue at GE’s power business fell 14% from the year before to $3.93 billion, weighed down by a 17% slide in gas power orders due to order timing while power portfolio orders fell 54% on a non-repeat large order.

Renewable energy revenue rose 13%, driven by a 19% gain in onshore wind orders.

Aviation revenue rose 8% to $8.11 billion as LEAP units drove results. GE said its CFM International jet-engine joint venture with French aerospace company Safran “continues to work closely with Boeing to ensure the timely and safe return to service of the 737 Max.”

Healthcare revenue rose 5% to $4.92 billion as orders firmed 1% while GE Capital reported a $645 million loss. The company said the loss was “driven by the impact of the annual insurance US GAAP premium deficiency test,” and “resulted in a non-cash pre-tax charge to earnings of approximately $1 billion, which was driven largely by discount rates and partially offset by premium rate increases.”

Price: 10.28 Price Change: +1.21 Percent Change: +13.34

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