By the company’s own admission, General Electric (NYSE:GE) will continue to have to deal with problems like inflation and supply chain constraints. However, GE stock is still moving higher today, around 6% higher, as the company reports outstanding top- and bottom-line second-quarter 2022 results.
Can General Electric CEO Lawrence Culp lead the company back into prosperity? That’s the billion-dollar question, and today Wall Street got some answers, or at least some positive data points.
Don’t misunderstand — General Electric still has issues to deal with. For instance, the company acknowledged that “inflation pressure” will weigh on General Electric’s Healthcare segment. Moreover, the company admitted that in 2022: “Working capital will be pressured as GE protects customers from the impact of supply chain challenges.”
These issues were undoubtedly present during 2022’s second quarter. Nevertheless, General Electric knocked it out of the park with Street-beating results. The company’s Q2 2022 adjusted earnings per share rose from 22 cents in the year-earlier quarter, to 78 cents. This easily beat the analyst consensus estimate of 37 cents.
Meanwhile, General Electric’s total revenue increased 2.2% year-over-year to $18.65 billion. This result exceeded the analyst consensus estimate of $17.46 billion. Also, General Electric reported quarterly free cash flow of $162 million — positive, not negative. This was a terrific result compared to the analyst consensus FCF of -$806.4 million — negative, not positive.
A Word of Warning as GE Stock Heads Higher
There was a note of caution from Culp, however. Apparently, the CEO wishes to warn investors about General Electric’s full-year prospects:
We continue to trend toward the low end of our 2022 outlook on all metrics except cash, which is lower due to timing of working capital and Renewable Energy-related orders.
To be more specific, General Electric is now guiding for a 2022 adjusted EPS of $2.80 to $3.50, but toward the lower end of that range. Concerning full-year free cash flow, General Electric reduced its forecast by roughly $1 billion, to a range of $4.5 billion to $5.5 billion.
Still, General Electric’s shareholders were in a buying mood this morning. GE stock was up 6% as of 11:30 a.m. Eastern. Could this be the turnaround moment for Culp and company? It’s possible as General Electric continues to win over shareholders and demonstrate its growth despite multiple challenges.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
