General Electric shares gain for a second straight session on Thursday, company projects full-year earnings below market expectations

March 15, 2019 9:29 am

Yesterday General Electric Company (GE) offered full-year profit forecast below Wall Street estimates due to expenses related to restructuring of its power business.

General Electric shares closed higher for a second consecutive trading session in New York on Thursday. It has also been the sharpest daily surge since March 11th. The stock went up 2.79% ($0.28) to $10.30, after touching an intraday high at $10.49, or a price level not seen since March 5th ($10.57).

Shares of General Electric Company have risen 36.06% so far in 2019 compared with a 12.03% gain for the benchmark index, S&P 500 (SPX).

In 2018, General Electric’s stock plummeted 56.62%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

The industrial conglomerate said it now expected adjusted earnings within the range of $0.50 to $0.60 per share for the entire 2019. In comparison, analysts on average expect earnings of $0.70 per share.

Adjusted industrial free cash flow for the full year is expected to be between negative $2 billion and zero. The projection takes into consideration charges of over $2 billion related to restructuring, corporate activity as well as “contingency” costs, GE said.

On the other hand, adjusted industrial free cash flow is expected to turn positive in 2020, while the improvement rate may even accelerate in 2021, the company said. However, GE did not provide any target figures.

Meanwhile, free cash flow for General Electric’s power business is expected to be negative in 2020, but to be in positive territory in 2021.

In a statement, GE’s Chief Executive Officer Larry Culp once again said that reduction of the company’s debt and performance improvement for its industrial businesses, especially the struggling power unit, still remained his top priorities.

According to CNN Money, the 14 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $11.50, with a high estimate of $18.00 and a low estimate of $6.00. The median estimate represents an 11.65% upside compared to the closing price of $10.30 on March 14th.

The same media also reported that 9 out of 20 surveyed investment analysts had rated General Electric’s stock as “Buy”, while 8 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for General Electric Company (GE) are presented as follows:

Central Pivot Point – $9.73
R1 – $10.42
R2 – $11.25
R3 – $11.94
R4 – $12.62

S1 – $8.90
S2 – $8.21
S3 – $7.38
S4 – $6.54

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