General Electric Investors Will Be Rewarded for Their Patience
General Electric's (NYSE: GE) latest presentation highlighted a classic investment conundrum. What do you do with a company that's subject to near-term risk around its earnings, but at the same time the stock also looks like a great value? Here's a look at what management is saying and what it means to the investment thesis for the industrial stalwart.
CFO Carolina Dybeck Happe's presentation at the Morgan Stanley Laguna Conference left investors doubting GE's full-year guidance. Discussing trading conditions in the third quarter, Dybeck Happe noted "continued supply chain pressures" were causing deliveries to "move later in the quarter." Consequently, free cash flow (FCF) is expected to be "in line with the second quarter."
Let's put some numbers to the commentary. GE's FCF was $162 million in the second quarter, and its FCF for the first half was a negative (meaning an outflow) of $718 million. Assuming FCF is the same in the third quarter as in the second quarter (in line with Dybeck Happe's commentary), GE's year-to-date FCF at the end of the third quarter would be a negative $556 million.
Source Fool.com
