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General Electric reported better than expected fourth quarter earnings before the open Wednesday. $GE Shares continued to recover, rising  10% to be up nearly 50% in the past 12 months to its highest level since October 2018.

GE CEO Larry Culp

New GE CEO Culp putting his own stamp on the company 

General Electric Co NYSE: $GE Reported Q4 Earnings Before Open Wednesday

$0.21 Missed Exp $0.18 EPS AND $$26.24 Beat Revenue Forecast of $25.57 Billion 

Earnings

General Electric reported Q4 earnings on Wednesday before the market with EPS of 21 cents vs. 18 cents expected by analysts surveyed by Refnitiv.

Revenue was $26.24 billion vs. $25.57 billion expected by the Refnitiv survey.

Industrial free cash flow was $2.3 billion for 2019, topping its own guidance of between $0 to $2 billion. FCF is a financial measure that’s often used as a gauge of efficiency.

 

General Electric Co NYSE: $GE

Reaction · Pre-market $12.90 USD +1.18 (+10.02%)

 Highights

“The fourth quarter marked a strong close to the year for GE. We met or exceeded our full-year financial targets and are on a positive trajectory for 2020,” Chairman and CEO Larry Culp said in a statement.

General Electric Q4 2019 earnings

Aviation had revenues of $32.9 billion last year, up 8% from $30.6 billion in 2018. Despite one of the unit’s major Boeing orders still in flux, its segment profit remained largely stable, notching $6.8 billion last year versus $6.5 billion the year before.

GE makes the engines for the grounded Boeing 737 Max aircraft. GE’s joint venture with French aerospace giant Safran recently laid off about 70 temporary workers at a facility in Quebec,  Culp acknowledged that the 737 Max situation is fluid, telling CNBC’s Seema Mody that GE is focused on being ready to resume production and ramp back up. GE said in its earnings that its 2020 outlook is “dependent on the 737 MAX’s return to service, which GE is planning for in mid-2020, in line with Boeing.”

GE power continues to struggle The company’s struggling power business remains in a rut. GE reported orders this past quarter fell 30% to $4.5 billion from the same period last year. Revenue remained flat year-over-year.

GE noted two large previous customers did not book orders again, losing one deal each for its steam- and gas-power divisions. Culp told CNBC that there will likely be quarterly volatility in GE’s power business ahead, with gas power being a piece of the company that needs to run more effectively.

New CFO GE also announced the appointment of Carolina Dybeck Happe as Chief Financial Officer, who will assume office early 2020. Kevin Cox has been appointed as Chief HR Officer and Pat Byrne as CEO of Digital.

What To Look For:

  • Aviation margin guidance, and particularly for commentary on the impact of LEAP production.
  • Power services margin, excluding the impact of the hit from the blade turbin issue.
  • GE Power blade turbine issue, any more surprises?
  • Renewable energy segment wind power price pressures Dividend plans, cut or maintenance?
  • Baker Hughes, a GE Company seperation. intends to exit the oil and gas businesses by disposing its 62.5% interest stake in Baker Hughes.
  • Update on stand alone Healthcare company
  • FCF guidance
  • CEO Culp's performance in the conference call

Outlook

GE’s 2020 earnings forecast came in below what analysts surveyed by FactSet expected. GE said it expects to see earnings of 50 to 60 cents a share next year, below the 67 cents a share analysts were looking for. GE’s forecast for industrial free cash flow next year was also higher than expected.

GE expects industrial FCF will come at $2 billion to $4 billion in 2020 — notably above the $1.2 billion expected by analysts. Bank of America’s estimate for GE’s industrial FCF was $1.8 billion before the company reported, already above Wall Street’s consensus. But, in light of the new information, Bank of America significantly increased its FCF forecast to $4.8 billion for 2020 – above even GE’s higher guidance.

Source: GE, AlphaStreet, TradersCommunity

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