GE Has a No-Drama Earnings Beat, Powered by Its Free Cash Flow

1 month ago 17
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General Electric is yet gaining momentum. The iconic institution posted better-than-expected earnings, with small drama, this past week. GE bushed estimates and raised its full-year, free-cash-flow guidance for concern operations to a midpoint of immoderate $4.3 billion, $800 cardinal implicit the erstwhile guidance. The stock, astatine $12.95, was up 2% connected the week and 20% this year. The S&P 500 scale is up 17% for 2021.

Larry Culp was hired successful precocious 2018 to crook astir a then-floundering GE. Industrial escaped currency travel generated from 2018 to 2020 amounted to $1.7 billion, down from a unsmooth mean of $12 cardinal successful 2015 to 2016. During the pandemic, currency travel skidded to immoderate $600 million. “[Free currency flow] has been the fixation for investors since [Culp] took over, and for evident reasons.…It was awful,” wrote Melius expert Scott Davis. He called the caller guidance a “notable and captious positive.” RBC’s Deane Dray said successful a note, “GE’s ‘North Star’ continues to beryllium improving [cash flow].” He rates GE shares a Buy, with a $16 terms target.

Another bull, William Blair’s Nicholas Heymann, praised GE’s “steady sequential betterment crossed virtually each businesses and cardinal metrics.” He sees 30% upside imaginable for the banal and rates it a Buy, but hasn’t published a terms target. A 30% gain, however, would enactment it astir $17.

Not everyone is that upbeat; Wall Street’s mean people is $14.68. Oppenheimer’s Christopher Glynn rates the shares a Hold, besides with nary terms target. Still, helium sees affirmative changes astatine GE. And it’s abruptly hard to find bears connected General Electric. Some 67% of analysts slap a Buy connected its shares, versus the mean Buy ratio for S&P 500 stocks of 55%. No 1 says sell.

Next Week

Monday 8/2

CNA Financial, Global Payments, JELD-WEN Holding, Loews, Arista Networks, Leggett & Platt, Vornado Realty Trust, ZoomInfo Technologies, Woodward, Take-Two Interactive Software, Heineken, Trex, Ferrari, Ultra Clean Holdings, and Simon Property Group are expected to merchandise fiscal results.

The Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for July. Consensus estimation is for a 60.8 reading, up from 60.6 successful June.

The Census Bureau reports operation spending for June. Expectations are for a 0.4% month-over-month rise, aft a 0.3% diminution successful May.

Tuesday 8/3

Eaton, BP, Under Armour, Lyft, Clorox, Amgen, Akamai Technologies, Cummins, Eli Lilly, Alibaba Group Holding, Nikola, EnPro Industries, Warner Music Group, Pitney Bowes, Tennant, Phillips 66, KKR, Gartner, Henry Schein, Dun & Bradstreet Holdings, Conoco Phillips, and Jacobs Engineering Group big league calls to sermon fiscal results.

The Census Bureau is slated to study mill orders for June. Economists foretell that orders accrued 1.0% during the month, compared with a 1.7% emergence successful May.

Wednesday 8/4

Sony Group, CVS Health, Kraft Heinz, SoftBank, General Motors, Progressive, Etsy, Electronic Arts, Western Digital, Uber Technologies, Roku, MGM Resorts International, Fox, and Re/Max Holdings are expected to big net calls.

The Bureau of Economic Analysis reports light-vehicle income for July. Expectations telephone for a seasonally adjusted yearly complaint of 15.3 cardinal vehicles, versus 15.4 cardinal successful June.

The ISM releases its Services PMI for July. Consensus estimation is for a 60.8 reading, compared with June’s 60.1.

ADP releases its National Employment study for July. Consensus estimation is for a 635,000 summation successful nonfarm private-sector employment, pursuing an summation of 692,000 successful June.

Thursday 8/5

Zillow Group, Beyond Meat, Yelp, Wayfair, Kellogg, Bayer, HanesBrands, Moderna, Regeneron Pharmaceuticals, Switch, Cushman & Wakefield, ViacomCBS, Cigna, Duke Energy, Square, News Corp, and Siemens are expected to study fiscal results.

Friday 8/6

The BLS releases the jobs reportfor July. Economists forecast a 800,000 emergence successful nonfarm payrolls, aft an 850,000 summation successful June. The unemployment complaint is expected to borderline down to 5.8% from 5.9%.

DraftKings, Dominion Energy, Gannett, MGM Growth Properties, AMC Networks, Canopy Growth, Tripadvisor, Spectrum Brands Holdings, E.W. Scripps, Cinemark Holdings, and Manitowoc big league calls to sermon fiscal results.

Write to Al Root astatine allen.root@dowjones.com

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