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GE stock soars after shortfall, but big free cash flow beats and bullish outlook

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Shares of General Electric Co. GE,
+2.45%
jumped 4.8% in premarket trading on Tuesday after the diversified industrial conglomerate reported fourth-quarter profit that beat expectations but revenue and free cash flow that beat forecasts. Net income rose to $2.44 billion, or $2.27 per share, from $538 million, or 6 cents per share, a year ago. Excluding one-time items, adjusted earnings per share fell to 8 cents from 20 cents, to miss the FactSet consensus of 9 cents. Revenue fell 16% to $21.93 billion, above the FactSet consensus of $21.75 billion, as its four business segments beat expectations. Industrial free cash flow was $4.4 billion, versus previous guidance of at least $2.5 billion. “The fourth quarter marked the end of a challenging year with strong free cash flow, reflecting the results of better operations as well as strong and improving orders in the power and renewables sectors,” said general manager Larry Culp. For 2021, GE expects adjusted EPS of 15 cents to 25 cents, below the current FactSet consensus of 37 cents, and FCF of $2.5 billion to $4.5 billion, while the BofA Securities analyst Andrew Obin predicted an FCF forecast of around $1.5 billion to $3.5 billion. The stock has climbed 48.9% in the past three months, while the S&P 500 SPX,
+2.43%
gained 13.4%.