General Electric Company ( GE) may not be the bellwether it once was, but the $265 billion industrial giant is still an important gauge of the health of the U.S. economy. On Friday, GE revealed its business is on track, reporting first-quarter earnings and revenue beats and reaffirming its 2017 guidance.
GE reported earnings per share of 21 cents on revenue of $27.66 billion, topping consensus analyst estimates of 17 cents and $26.4 billion, respectively. GE also assured investors it is on pace to earn between $1.60 and $1.70 per share in 2017.
The company’s merger/spinoff deal with Baker Hughes Incorporated ( BHI) is also on schedule to close in mid-2017, according to GE CEO Jeff Immelt. Baker Hughes oil services rival Schlumberger ( SLB) reported its first year-over-year revenue gain in nine quarters on Friday morning.
“We are executing a $2 billion cost-out program over 2017 and 2018 to deliver more value to our customers, shareholders and employees,” Immelt said.
The one caveat on an otherwise strong quarter was GE’s negative $1.6 billion in cash flow, much lower than the $600 million the company had anticipated. Management blamed the shortcoming in part on the timing of customer bills.
Harbor Advisory chief investment officer Jack De Gan says GE delivered “a great report.”
[Read: General Electric Charges Ahead.]
In March, William Blair analyst Nicholas Heymann said bearish sentiment on GE stock has gotten too high, and GE should have no problem hitting its 2017 and 2018 earnings targets.
“We believe the pervasive skepticism restraining GE’s share performance currently really has only one way to evolve: more constructively as we expect GE executes on its targeted objectives,” Heymann says.
Looking ahead, Heymann sees three primary catalysts for long-term GE investors: U.S. corporate tax reform, U.S. infrastructure investment and the maturation of GE’s technology segment, GE Digital.
[Read: How to Invest in Infrastructure After the Election.]
GE shares initially demonstrated a muted reaction to earnings, opening Friday’s session down 0.7 percent.
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General Electric Co. (GE) Is on Track Ahead of Key 2017 Catalysts originally appeared on usnews.com
