6. GE Aerospace (NYSE:GE)
GE Aerospace (NYSE:GE) was among the stocks covered in Jim Cramer’s Mad Money recap as he urged investors to focus on the fundamentals of companies. Cramer noted that “every key line was above expectations” in the company’s earnings report. He stated:
Let’s start with GE Aerospace, which reported first this morning and gave us an incredible set of numbers. Every key line was above expectations… Really, there wasn’t much to quibble with at all here. Demand is insatiable, and that’s true on both sides of the business. Management’s self-improvement plan, designed to fix supply chain issues and improve outputs, is paying immense dividends. While GE Aerospace’s operating margin declined a bit, that was expected. The actual numbers still came in above the estimates. I was expecting good numbers, but when I spoke to the CEO, Larry Culp, this morning, I was positively gushing with surprise. Oh my God, that backlog. But rather than rallying in response, the stock tumbled $16.87, 5.6%.
Why? Mostly because management decided not to raise their full-year forecast. With the types of beats that we saw for the first quarter and the fact that GE Aerospace has tremendous visibility into the future, a lot of people hoped they’d raise their forecast. I thought that was unrealistic… Raising your forecast after the first quarter would be an unusual move, especially given what’s happening in the world, right?… In the end, management reiterated every line of its full-year outlook, even as they also noted that they’re trending toward the higher end of these numbers. Plus, they clarified that the full-year forecast includes several negative assumptions about the global economy, like persistently high oil prices through the third quarter, a near-term impact from fuel shortages, and a reduction in global GDP estimates.
Basically, GE Aerospace gave us a pretty conservative forecast, so I’m not really sweating the fact that they didn’t give us a classic beat and raise quarter. You can read between the lines and understand that the company’s doing extraordinarily well, but management wants to be cautious about the future, given all the disruption that we’ve seen from the turmoil in the Middle East. Given how dramatically this stock sold off on a very good quarter, I’d be a buyer down here, and if it pulls back again, I think you should feel confident about buying more. I thought about putting it in the Charitable Trust bullpen today.
GE Aerospace (NYSE:GE) manufactures commercial and defense aircraft engines, power systems, and related components. In addition, the company provides maintenance, repair, and overhaul services along with spare parts for aviation and military applications.
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