General Electric Company (NYSE: GE) reported yet another earnings miss on Wednesday morning, but GE stock continued its bounce off of multi-year lows after 2018 guidance came in above expectations.
General Electric reported adjusted fourth quarter earnings per share of 27 cents on revenue of $31.4 billion. Both numbers missed consensus expectations of 29 cents and $34 billion, respectively. Revenue was down 5 percent compared to a year ago.
However, GE guided for 2018 EPS of between $1 and $1.07. While the updated guidance is on the low end of the range of $1 to $1.11 the company gave last quarter, the stock’s recent sell-off suggests the market had been pricing in yet another steep guidance cut.
[See: 7 of the Best Stocks to Buy for 2018.]
CEO John Flannery says GE’s cash flow was better than expected in the fourth quarter.
“Our results this quarter demonstrate some of the early progress we are seeing from our key initiatives,” Flannery says. “The team is focused on operational execution, capital allocation and deep cost reduction to position us for continued improvement in 2018.”
GE reported a $1.7 billion drop in structural costs in 2017, well above its $1 billion target. GE plans to cut another $2 billion in costs this year as part of Flannery’s initiative to streamline the company and focus on its core businesses of aviation, power and health care.
GE stock dropped from a January high of $19.39 to as low as $15.80 this week after the company announced it would take a $6.2 billion charge to its fourth-quarter earnings as part of an internal review of its GE Capital financing arm. GE also announced it would be adding $15 billion to its capital reserves over the next seven years.
[See: 7 of the Best Blue-Chip Stocks to Buy for 2018.]
GE’s recent sell-off picked up steam last week when multiple media outlets reported the company could announce a breakup within months.
Earlier this week, Bank of America analyst Andrew Obin said GE will need to break its pattern of guidance cuts in order to regain investor trust in the long term. “We note that the company has undergone a significant reinvestment cycle, positioning the company well from a competitive standpoint,” Olin says. “However, we do not see the stock outperforming in the face of possible further negative earnings revisions.”
Bank of America has a “neutral” rating and $17 price target for GE stock.
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General Electric Company (GE) Stock Gets a Welcome Reprieve originally appeared on usnews.com
