In 2021, General Electric hopes to see the recovery of its aviation unit that dropped 41% from a year earlier as a result of the pandemic.
On Tuesday, American tech giant General Electric Company (NYSE: GE) released its Q4 2020 earnings report. The company’s fourth-quarter profit missed expectations, however, its revenue and free cash flow beat Wall Street forecasts. Following the news, GE shares rose by 2.73% to close at $11.29 yesterday. After hours, GE stock added another 0.18% to $1.31. GE market cap is $98.9 billion. Year-to-date, GE stock is 4.54% up.
General Electric Q4 and Full 2020 Results
According to Refinitiv analysts, they expected the company’s fourth-quarter revenue to total $21.83 billion and adjusted EPS to make up 9 cents per share. FactSet also predicted adjusted EPS of 9 cents on the revenue of $21.75 billion. As for Zacks Consensus Estimate, they expected adjusted GE earnings to plunge 62% to eight cents a share, which turned out to be in line with the actual General Electric results.
The company’s Q4 revenue made up $21.93 billion, 16.5% from Q4 2019. Total orders accounted for $23.2 billion, 3% down. Further, net income increased to $2.44 billion, or $2.27 a share, from $538 million, or 6 cents a share, in the year-ago period.
As for full 2020 results, General Electric posted total revenues of $79.6 billion, total orders of $72.0 billion, and $606 million cash flow.
Commenting on th company’s performance, GE Chairman and CEO H. Lawrence Culp said:
“As 2020 progressed, we significantly improved GE’s profitability and cash performance despite a still-difficult macro environment. The fourth quarter marked a strong free cash flow finish to a challenging year, reflecting the results of better operations as well as strong and improving orders in Power and Renewable Energy.”
CFRA analysts stated:
“We think investors should take this number with a grain of salt, as it excludes $2.5B of pension plan funding, after which free cash flow was an estimated negative $1.9B.”
GE 2021 Expectations
For 2021, GE expects adjusted EPS of 15 cents to 25 cents, below the current FactSet consensus of 37 cents, and FCF of $2.5 billion to $4.5 billion. Besides, the company is expecting its organic industrial revenue to rise in the low single digits, with industrial free cash flow of $2.5 billion to $4.5 billion.
In 2021, General Electric hopes to see the recovery of its aviation unit. It dropped 41% from a year earlier as a result of the pandemic. The company “assumes Aviation revenue being flat to up year-over-year, which is dependent on the Commercial Aviation market recovery accelerating in the second half of 2021 as well as the timing of aircraft deliveries.”
In other words, the GE’s 2021 financial performance will depend mostly its aviation business.
Above all, General Electric is betting on its health unit that aims to make new tech to treat Covid patients. In 2020, it was offset by lower demand for other medical equipment.
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