This is Why GE Shares Just Saw a Big Bounce

Shares of General Electric were moving higher on Thursday in premarket trading after CEO Larry Culp gave investors some needed optimism. The stock saw a nearly 4% gain on the news.

The CEO provided Wall Street with an upbeat long term outlook on the company’s struggling power business.

He said to CNBC’s Morgan Brennan, “We will have a greater level of negative cash flow in [the power] business this year.”

In 2018, the company’s power business had a negative cash flow of $2.7 billion. Culp had said “it will be worse” in 2019 but now says it’s “game on” for this year.

“From there will get significantly better in 2020, and we expect positive free cash flow in 2021,” Culp said.

“Power is in a serious turnaround mode. This is not going to be quick, by any stretch,” Culp said last week during the company’s earnings call.

On an adjusted basis, GE revised its 2018 earnings to 53 cents a share, down from 65 cents a share. On a GAAP (nonadjusted) basis, GE revised total 2018 revenue to $105.2 billion from $113.6 billion.

General Electric has forecast full-year 2019 earnings in the range of 50 to 60 cents per share, coming in shy of the Street consensus forecast of 70 cents a share. The company said that it adjusted industrial free cash flow burn could reach $2 billion, but said that figure will turn positive by 2020

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