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Hype Asset of the Day | August 2nd, 2022

Updated: Aug 4, 2022




General Electric Company (NYSE: GE)

General Electric Company (GE) is one of the biggest American corporations and also one of the most diversified companies in the world. It was founded in 1892 and has its headquarters in Fairfield, Boston. The company’s products include electrical and electronic equipment, aircraft engines, and financial services among many others. Having recently surpassed analyst expectations with its Q2 report, General Electric has seen a huge increase in mentions by 135%, prompting investors to wonder what has given the company so much hype. General Electric shares currently trade at $75.20.



Positive Hype

There are multiple reasons why this stock should be on your radar at the moment, some of them are as follows.

  • General Electric reported adjusted earnings of $0.78 per share on revenue of $18.65 billion, easily surpassing the consensus estimates for earnings of $0.38 per share on revenue of $17.6 billion.


  • In addition, GE's adjusted operating profit surged 81% to nearly $1.7 billion, and adjusted earnings per share (EPS) jumped to $0.78 from $0.22 a year earlier while analysts had only expected $0.37.


  • Despite the slight lowering of its guidance, it still expects to post 2022 adjusted EPS of at least $2.80, ahead of the recent analyst consensus of $2.78.


  • Post the sale of its remaining shares of Baker Hughes, netting $3.8 billion, the company made a $2 billion capital contribution to GE's insurance business and $664 million of dividends and share buybacks, while still allowing GE to reduce its net debt slightly.


  • Thanks to having a narrower focus on areas like healthcare and renewable energy as well as aerospace services, the company is now looking for a free cash flow of between $5.5 billion and $6.5 billion this year, en route to $7 billion for 2023 and up from $5.1 billion last year.


  • Aerospace revenue was up 27% year over year and profit margin increased by 1,510 basis points to 18.7%. Aerospace services delivered revenue growth of 47%, which with the industry demand going up as it is has become a great sign.

Negative Hype

Although General Electric Company has generated a lot of positive hype, there is still a reason to be precautious before taking a position in the company. Here is one of them.


  • GE said it "continues to trend" toward the low end of its 2022 estimates, and management warned that supply chain issues are impacting working capital and will likely delay some of its free cash flow targets into 2023.

Conclusion

General Electric has been very lucky to have a turnaround at this time, with the improvement in financials as well as the spin-off that the company announced it seems to be doing very well for itself. However, with the supply chain issues that have remained since the pandemic the company might still face difficulties in the near future. Despite this, GE has a positive outlook for the future and could be a great addition to your portfolio given its current price.




HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.




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