In a meeting with a J.P. Morgan Chase (JPM) analyst on Tuesday, the CEO of General Electric, Larry Culp, said that the company’s free cash flow – money left over after a company pays for operating expenses and capital spending – will be negative in 2019. After Culp’s comments, GE’s shares plunged nearly 4.7% to end the day at $9.89.
Free cash flow is often an indicator of a company's operating efficiency and as such is closely watched by investors.
The company generated ~$4.5 billion of free cash flow last year, but if it’s going negative from there, that means it is struggling with a few pressing issues. According to Culp, these are a combination of operational pressure, power, renewables, and then the non-operational pressures which he calls ‘policy.’ Culp further added that he is currently focussing on improving the company’s cash generation, as well as cutting costs.
However, prior to this meeting, the J.P. Morgan analyst had already warned investors not to get blind-sided by GE’s apparent gains, as the company’s prized aviation financing and leasing business are already in liquidation mode and has weakening earnings.
In reply, Culp assured that his team is fully committed to improve their disclosers and that investors need to remain patient through the restructuring process.
Despite this assurance, Culp has painted a realistic picture of where GE’s battered power business will struggle even more than last year resulting in a greater level of negative free cash flow. It may take another two years to turn around in this segment.
Culp also confirmed oxidation issues with the company’s line of gas-fired power turbines, called H-class turbines. But he added that these have been timely addressed by already upgrading 23 out of the 33 turbines.
Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where GE declined for three days, in of 281 cases, the price declined further within the following month. The odds of a continued downward trend are .
GE broke above its upper Bollinger Band on April 23, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 59 cases where GE's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on April 23, 2024. You may want to consider a long position or call options on GE as a result. In of 87 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for GE just turned positive on April 23, 2024. Looking at past instances where GE's MACD turned positive, the stock continued to rise in of 50 cases over the following month. The odds of a continued upward trend are .
GE moved above its 50-day moving average on April 03, 2024 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for GE crossed bullishly above the 50-day moving average on April 08, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 14 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where GE advanced for three days, in of 320 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 345 cases where GE Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. GE’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 71, placing this stock better than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.838) is normal, around the industry mean (6.670). P/E Ratio (41.892) is within average values for comparable stocks, (35.274). Projected Growth (PEG Ratio) (1.862) is also within normal values, averaging (1.970). Dividend Yield (0.003) settles around the average of (0.017) among similar stocks. P/S Ratio (2.520) is also within normal values, averaging (4.569).
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a manufacturer of products for the generation, transmission, distribution, control and utilization of electricity; manufactures aircraft engines and medical equipment
Industry AerospaceDefense