General Electric shares fall the most in three months on Friday, quarterly sales and EPS above expectations, but cash outflow concerns weigh

Shares of General Electric Company (GE) retreated sharply on Friday, in spite of better-than-anticipated quarterly sales and adjusted earnings, as concerns over the companys cash outflow weighed.

General Electric shares registered their largest daily loss since January 23rd on Friday, which also marked the first drop in the past five trading sessions. The stock went down 2.38% ($0.72) to $29.55, after touching an intraday low at $29.45, or a price level not seen since March 28th ($29.25). In the week ended on April 23rd the shares of the industrial giant lost 0.03% of their market value compared to a week ago, which marked a second consecutive period of decline, but yet, the smallest decrease since the week ended on May 1st 2016. The stock has extended its loss to 0.84% so far during the current month, following a 0.03% dip in March. The latter has been the smallest monthly retreat in more than two years. For the entire 2016, General Electric shares gained 1.44%.

Total revenue was reported to have shrunk 1% to $27.66 billion during the first quarter, dragged down by weaker sales in GEs oil-and-gas and lighting businesses. In comparison, the median forecast by analysts had pointed to a sharper drop in revenue – to $26.26 billion, according to Thomson Reuters I/B/E/S.

Adjusted earnings per share were reported at $0.21 in Q1, or unchanged compared to the same period a year earlier. In comparison, the market consensus had pointed to earnings of $0.17 per share.

On the other hand, the companys cash flow from industrial operating activities was reported to have been negative $1.6 billion during the latest quarter, as working capital rose by $1.3 billion. In comparison, GE had expected a negative $600 million in cash flow for the first quarter. Regardless of the actual figure, the industrial giant still projects to achieve its full-year cash objective of $12 billion to $14 billion.

Another concern arose from the fact, that GE backed away from its firm target of 500 LEAP aircraft engines delivered in 2017. It now expects to deliver between 450 and 500 engines this year.

However, in an interview, Jeff Bornstein, the companys Chief Financial Officer, said the LEAP forecast had not been changed. “Were not changing our view on our ability to deliver the LEAP engine this year for Boeing and Airbus”, the CFO was quoted as saying by Reuters. According to Bornstein, 81 engines were delivered during the first quarter of 2017, while another 100 are expected to be shipped in Q2.

According to CNN Money, the 14 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $34.00, with a high estimate of $36.00 and a low estimate of $27.00. The median estimate is a 15.06% surge compared to the closing price of $29.55 on April 21st.

The same media also reported that 9 out of 18 surveyed investment analysts had rated General Electric’s stock as “Buy”, while 6 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, todays levels of importance for the General Electric stock are presented as follows:

R1 – $29.64
R2 – $29.72
R3 (Range Resistance – Sell) – $29.81
R4 (Long Breakout) – $30.06
R5 (Breakout Target 1) – $30.36
R6 (Breakout Target 2) – $30.48

S1 – $29.46
S2 – $29.38
S3 (Range Support – Buy) – $29.29
S4 (Short Breakout) – $29.04
S5 (Breakout Target 1) – $28.74
S6 (Breakout Target 2) – $28.62

By using the traditional method of calculation, the weekly levels of importance for General Electric Company (GE) are presented as follows:

Central Pivot Point – $29.85
R1 – $30.24
R2 – $30.94
R3 – $31.33
R4 – $31.73

S1 – $29.15
S2 – $28.76
S3 – $28.06
S4 – $27.37