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General Electric Demonstrates Strong Q3 Earnings as Stock Price Surges Northwards

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by Bhushan Akolkar · 2 min read
General Electric Demonstrates Strong Q3 Earnings as Stock Price Surges Northwards
Photo: generalelectric / Instagram

GE has shown good signs of resurgence and recovery. The company performance across power and aviation division has also improved significantly.

American multinational conglomerate General Electric has brought new hope for its investors after its announced strong Q3 results. GE has been struggling over the past three years witnessing a major slowdown in its output. In the last three years, the GE stock price has been on a constant downfall and corrected over 66%.

However, under the recent leadership of Larry Culp, the multinational giant looks poised for a solid resurgence. After the company announced its Q3 earnings on Wednesday, GE’s stock shot over 12% in a single day. GE’s stock price is currently at $9.98 as on the Thursday closing.

GE’s industrial free cash flow stood at $650 million. Free cash flow indicates the cash leftover with the company after it pays for capital expenditures and operations. The company has raised its target to generate $2-billion of free cash flow in 2019. GE’s strong performance comes just at a time when the global manufacturing and industrial outlook seems bleak.

GE Chairman and CEO H. Lawrence Culp, Jr. said:

“Our results reflect another quarter of progress in the transformation of GE. We are encouraged by our strong backlog, organic growth, margin expansion, and positive cash trajectory amidst global macro uncertainty. This quarter, during strategy reviews with each of our businesses, we identified and prioritized operating improvements and growth investments that will drive sustainable results.”

“We have more work to do, and we will continue to take actions to improve our financial position and strengthen our businesses as we prepare for 2020 and beyond. I remain confident that we will unlock value for GE’s stakeholders as our transformation accelerates,” added he.

GE’s Performance across Other Divisions

While the overall company performance improved, GE’s power unit continued showing its weakness. The power unit’s revenue dropped 14% to $3.9 billion, in comparison to the last year. Orders for major power products and turbines dropped by 30%. However, the power unit has managed to constrain its loss to $144 million against a $676 million loss last year.

The company’s aviation unit did well with an 8% rise in revenue currently standing at $8.1 billion. This performance comes despite the Boeing 737 Max being grounded for the last few months. GE manufactures engine for the 737 Max and is currently facing $400 million headwinds every quarter since the Boeing aircraft is out of service.

GE is showing signs of a good turnaround with a consolidated net loss of $9.5 billion in Q3 2019 against a $22 billion loss in Q3 2018.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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