This Beaten-Down Stock Looks Like a Great Value Now
Given the negative expectations going into the quarter, all General Electric (NYSE: GE) had to do was credibly maintain its outlook for 2022, and the stock was liable to benefit. That's pretty much what happened, but with the stock up nearly 13% in July, were the results good enough to justify even more gains? Let's take a closer look at what happened and what investors can expect for the rest of 2022.
Management maintained its headline guidance for full-year revenue growth in the low-single-digit to mid-single-digit range and adjusted earnings per share of $2.80 to $3.50, but said it was trending toward the low end of the ranges. However, its free cash flow (FCF) guidance of $5.5 billion to $6.5 billion was walked back, with CEO Larry Culp saying investors should expect a"push out approximately $1 billion of free cash flow into the future."
There are two ways to look at the FCF situation. If you pencil in, say, $4.5 billion for FCF in 2022, then GE's current market cap of $78.7 billion puts it on 17.5 times FCF for 2022. That's an excellent multiple for a stock in recovery mode. On the other hand, RBC analyst Deane Dray asked about the company's long-standing target of $7 billion in FCF in 2023.
Source Fool.com
