General Electric Moves Higher On Strong Q4 Free Cash Flow Performance

General Electric Video 26.01.21.

General Electric Shares Gain Ground After The Release Of Q4 Earnings Report

General Electric stock is up by more than 5% in today’s trading session after the company provided its fourth-quarter earnings report.

General Electric reported fourth-quarter revenue of $21.9 billion and adjusted earnings of $0.08 per share, beating analyst estimates on revenue and missing them by $0.01 on earnings.

Traders focused on the company’s improved free cash flow performance. The company recorded free cash flow of $4.4 billion in the fourth quarter, driven by working capital movements and improving Renewables and Power orders.

General Electric managed to improve its free cash flow performance despite the challenges posed by the coronavirus pandemic, and the market rewarded the company by pushing its shares to multi-month highs.

Analysts expect that General Electric’s earnings performance will continue to improve in the upcoming years, and the fourth-quarter earnings report suggests that the company is moving in the right direction.

General Electric Stock May Move Towards 2020 Highs In Case Sector Rotation Continues

Shares of General Electric finished the year 2020 on a strong note as sector rotation provided significant support to industrials in the last months of the previous year.

However, the stock has not reached 2020 highs as the continued problems on the coronavirus front around the world continue to weigh on market sentiment.

As S&P 500 is at all-time highs, investors and traders actively search for stocks which have not reached exorbitant valuations. In this situation, General Electric’s successful turnaround story and increased sector rotation may push the company’s shares to new highs.

However, it should be noted that General Electric’s performance remains heavily dependent on the developments in the real economy while a material stake in Baker Hughes makes the company’s shares sensitive to oil price dynamics.

In this light, General Electric stock will likely need additional positive news on the vaccine front for sustainable upside in the near term as markets served by the company will clearly benefit from improvements on the healthcare front.

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