• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

General Electric Holds Its Ground Despite Disappointing 2019 Profit Forecast

GE shares initially were down after releasing its outlook but regained that lost ground before the open.
By KEVIN CURRAN Mar 14, 2019 | 08:47 AM EDT
Stocks quotes in this article: GE

General Electric Co.  (GE) stock managed to hold its ground in premarket trading Thursday despite a 2019 profit forecast that was below analyst estimates.

Shares of the Boston-based industrial standby initially were down in pre-market trading after the announcement but regained the lost ground and were up around 1.5% an hour before Thursday's opening bell. GE shares are down about 10% from their late February high, taking the steam out of what had been a run of more than 50% from its December lows.

GE is forecasting full-year 2019 earnings in the range of $0.50 to $0.60 per share, short of Street consensus of $0.70 per share, and CEO Larry Culp warned that industrial free cash flow burn could reach $2 billion before returning to the black in 2020. GE also said the impact of U.S. tariffs on China-made goods would be in the region of $300 million to $500 million.

The cash flow comments add anxiety to a stock already stung by Culp's comments at the JP Morgan Aviation, Transportation & Industrials conference that noted industrial free cash flow will swing from $4.5 billion in 2018 into negative territory this year as "market pressures impacting volume" as well as "project and execution challenges" affect its struggling power division.

"GE's challenges in 2019 are complex but clear. We are facing them head on as we execute on our strategic priorities to improve our financial position and strengthen our businesses," Culp said. "We have work to do in 2019, but we expect 2020 and 2021 performance to be significantly better with positive Industrial free cash flow as headwinds diminish and our operational improvements yield financial results."

The documents add that 2021 is expected to be the timeline to reach break-even in the struggling GE Capital unit.

"We will continue to take thoughtful actions to reduce downside risk and increase upside optionality to create long-term value for our shareholders," Culp added in comments ahead of the group's investor day in New York.

The CEO cited the dividend slash late last year as an indication of action GE is willing to take to stabilize its balance sheet and keep creditors off the company's back.

"Simply put, we have too much debt and we need to reduce it thoughtfully and soon," Culp said earlier this year. "Once we put our balance sheet in a healthier place, we'll be in a better position to play offense across all our businesses."

The company is targeting a credit rating "in the Single A range" as well as an Industrial leverage ratio of less than 2.5x net debt to EBITDA, and a GE Capital debt-to-equity ratio of less than 4x to achieve a more healthy balance sheet, according to the documents.

To hear Culp's first outlook call as he charts the long road to recovery at GE, click here for the webcast of the investor day, scheduled to kick off at 8:30 ET.

How Much Money Will I Need to Retire?

Want to learn about retirement planning from some of the nation's top experts? Join TheStreet's Robert "Mr. Retirement" Powell live in New York on April 6 for our Retirement Strategies Symposium. For a limited time, tickets are available for $99 for this full-day event. Check out the agenda, learn about the speakers and sign up here.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees are restricted from trading individual securities.

TAGS: Earnings | Investing | Stocks | Value Investing | Aerospace | Conglomerates | Industrials | China | Analyst Actions | Stock of the Day

More from Stocks

When it Comes Time to Sell, Will You Act or Will You Freeze?

James "Rev Shark" DePorre
Jan 16, 2021 10:00 AM EST

Why don't more people embrace the ease and power of selling stocks? Why do they freeze and do nothing as losses build?

Hungry Traders and Stock Opportunities Aren't Likely to Go Away Soon

James "Rev Shark" DePorre
Jan 15, 2021 4:40 PM EST

It doesn't take much time for stocks with strong momentum to reset and continue on their way.

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

United Parcel Service Is Testing Key Support

Bruce Kamich
Jan 15, 2021 2:30 PM EST

A look at the charts of UPS.

A Buy and Hold Play With Hennessy Capital V

Timothy Collins
Jan 15, 2021 2:24 PM EST

HCICU hit the public markets today.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login