GE (NYSE: GE) stock price bounced to the highest level in the past twelve months, thanks to the big changes in the business model following the arrival of a new CEO. The company needs to sustain the recent momentum along with making more big changes in the operational strategies to prosper in 2020.
The company has announced a business plan of focusing on industrial, aerospace and power-related businesses. This strategy has created a lot of cash for the struggling industrial company. The company had sold billions of dollars of assets in the past couple of quarters.
GE stock price rose by 50% since the beginning of 2019; the shares are currently trading around $11 at present. The company’s share price performance is also correlated to the final quarter results.
New Business Strategies are Adding to Sentiments
The rally in GE shares has been receiving support from the big business changes announced by GE Chairman and CEO H. Lawrence Culp. These strategies led the company to reduce billions of dollars of debt in the past few quarters.
In the past quarter alone, the company sold $9 billion of assets. Consequently, it has also raised free cash flow guidance for the full year to $2 billion compared to the earlier forecast for negative free cash flows.
GE Chairman and CEO H. Lawrence Culp, Jr. said, “We are encouraged by our strong backlog, organic growth, margin expansion, and positive cash trajectory amidst global macro uncertainty. We are raising our Industrial free cash flow outlook again even with external headwinds from the 737 MAX and tariffs.”
Outlook is Improving
Although the company has increased its FCF guidance and maintained an adjusted earnings outlook, investors are expecting a further improvement in financial numbers. Their industrial businesses are generating positive results while the company is experiencing growth in backlog from the power segment. Investors should also keep an eye on 737 MAX related activities.