Tuesday was a good day for General Electric (NYSE: GE). Today is looking somewhat worse. After rising $0.30 in share price after the company released its fourth-quarter earnings, GE stock has now given back all its gains and a little bit more, and is down 3.4% as we begin the final half hour of trading.
So what happened to GE?
Yesterday, the company reported slightly better-than-expected revenue, but slightly worse-than-expected earnings ($0.08 per share, adjusted). Such "mixed" news might ordinarily not have moved the stock price much, but GE also reported generating twice as much cash as it had promised -- $4.4 billion -- and that got investors very excited that the company's turnaround might be progressing faster than expected.
Today, investors seem to be rethinking their optimism about that in the face of a broad market sell-off. But here's the thing:
However nervous investors are about the market in general, and where it might be headed next, General Electric's numbers are already in the books. They're facts. It's a fact that GE has stopped burning cash, and begun generating it instead. And that fact lends credence to GE's prediction that this year, it will generate anywhere from $2.5 billion to $4.5 billion more.
That prediction led one analyst, Morgan Stanley, to raise its price target on GE stock to $13 this morning, calling GE's prediction conservative (i.e., GE might even generate more cash than it's promising). At the same time, GE's underpromising and then overdelivering in Q4 elicited a comment from Citigroup to the effect that there's "growing evidence" that GE is back on track, and able to deliver on its promises.
So long as it keeps doing that, I think GE's stock is going to do just fine -- and I'd go so far as to say GE stock will probably recover its losses of Tuesday in relatively short order.
10 stocks we like better than General Electric
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and General Electric wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 20, 2020
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.