Is GE Stock Ready for a Turnaround?
It's no secret that the key to the investment case for General Electric (NYSE: GE) depends upon a turnaround in three of its four industrial segments -- the healthcare segment is doing just fine. It goes without saying that each business needs to see favorable end markets, but given growing or even merely stable market conditions, are GE's segments really positioned to take advantage? Let's take a closer look.
GE has been winning plaudits for improving its free cash flow (FCF) generation relative to management's previous guidance and market expectations. That's something that could be boosted further if market speculation is correct and GE sells its aircraft leasing business, GECAS, to Aercap. A sale could bring cash in which could be used to reduce debt and therefore interest payments in the future.
Turning back to the industrial businesses, GE Healthcare is on track for another year of at least $2.6 billion in FCF. However, GE Power and GE Aviation were practically breakeven in terms of FCF in 2020, while GE Renewable Energy had a $640 million outflow. If GE is going to hit management's guidance for $2.5 billion to $4.5 billion in FCF in 2021 and grow beyond that, then all three are going to have to continue improving.
Source Fool.com
