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For General Electric Company (NYSE: GE ), the last decade has been a period of uncertainty. The engineering conglomerate started a reorganization drive some time ago, with a focus on splitting into three independent companies. In a sign that its restructuring efforts are paying off, the company continued to improve profits and posted record earnings in its most recent quarter.
GE ended 2022 on an upbeat note, delivering strong margin growth and cash flow in the fourth quarter. The business has become leaner following the GE Healthcare spin-off and is expected to become more nimble once the energy business is spun off, which is expected early next year.
Aerospace Leads
In the last three months of fiscal 2022, revenue rose 7% to $21.8 billion and exceeded expectations. The growth was driven primarily by strong demand for jet engines and electrical equipment. That more than offset the weakness in the company’s renewable energy division, which prompted management to issue cautious earnings guidance for fiscal 2023. While forecasting continued free cash flow growth for the year, GE executives warned that the energy division will have operations. losses up to $ 600 million. Going forward, GE Aerospace will continue to be a key growth driver.
Lawrence Culp, GE’s chief executive officer, said on the earnings call, “Every business, orders and sales prices continue to increase with a selectivity strategy that produces a more profitable backlog and pipeline. Orders and service revenues, excluding repower, are increasing. There is certainly more to do and the next six months will remain challenging, but we act quickly. In 2023, we expect mid-single-digit growth, improved profitability, and flat to increase free cash flow.
Jump profit
Fourth-quarter adjusted profit rose 51% from a year ago to $1.24 per share. On a reported basis, the bottom line rebounded from a loss of $3.55/share last year to earnings of $1.93 per share. Interestingly, earnings beat estimates more often in the past few years than in the past. Continuing the recovery, new orders increased rapidly during the quarter.
Infographic: Lockheed Martin Q4 2022 revenue growth
Reflecting positive investor sentiment, GE shares made steady gains since the start of the year and maintained an upward trend following the earnings release. The stock, which has gained about 68% in the fourth month, traded higher during Wednesday’s session, hovering slightly above its 52-week moving average.
In Bourses
The stock has become more attractive than ever, and its current value provides a safe entry point for those looking to invest. At the same time, the bullish outlook is encouraging long-term shareholders who have been patiently waiting for returns.
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