Written by Brenda Nakalema

GE Earnings Beat Estimates. Stock Is Rising.

General Electric (ticker: GE) exceedingly surpassed Wall Street’s second-quarter expectations and provided full-year guidance that was as good as most …

General Electric (ticker: GE) exceedingly surpassed Wall Street’s second-quarter expectations and provided full-year guidance that was as good as most analysts expected. Shares rose at the start of the day.

General Electric reported second-quarter adjusted earnings of 78 cents a share from $17.9 billion in sales. Wall Street was expecting an EPS of 37 cents from sales of $17.8 billion.

Free cash flow stood at about $200 million, slightly better than analysts had projected. For the full year, GE expects that it will generate roughly $4.5 billion to $5.5 billion in free cash flow. That stands at roughly $1 billion less than management had indicated earlier due to working capital pressure “as GE protects customers from the impact of supply chain challenges.”

The expectation is that bottom line earnings per share for the full year will stand at $2.80 to $3.50 a share, which has been forecast for months, but GE says the number will probably lean toward the bottom end of that range. That isn’t a big surprise. Wall Street had previously cut GE earnings to roughly $2.80 a share as a reflection of a weak first quarter and the effects of the slowing global economy.

GE shares were up nearly 4% shortly after the results were released. S&P 500 and Dow Jones Industrial Average futures dropped 0.4% and 0.5%, respectively. Investors were relieved.

“The GE team delivered a strong second quarter with growth in orders, revenue, and profit, as well as positive free cash flow,” said CEO Larry Culp.

Aerospace sales and operating profits recovered. Revenue climbed 27% year over year. Operating profit stood at $1.1 billion, an increase from $908 million reported in the first quarter of 2022.

Operating margins at GE Healthcare bounced back as well. The health unit reported second-quarter operating profit and profit margins of $651 million and 14.4%, respectively. First-quarter operating profit and profit margins disappointed investors at $538 million and 12.3%, respectively.

As for GE’s renewable power business, the venture continues to lose money. The second-quarter operating loss stood at $419 million, roughly the same level as the first quarter loss of $434 million.

Investor’s expectations were low ahead of the news. Shares in the company had dropped roughly 30% in the second quarter. The S&P 500 declined roughly 16%, and industrial stocks in the S&P 500 about 15% on average in those same three months. And shares declined over 10% after the company reported its first-quarter numbers.

Options markets predicted the stock would improve 6%, up or down, after the numbers are released. Shares declined 10.3% after the first-quarter report. Shares have moved 5%, up or down, on average over the past four quarterly reports.

By Tuesday trading, GE stock was down 28% this year. The S&P 500 and Dow Jones Industrial Average are down 17% and 12%, respectively, over the same span.