GE, Raytheon raise 2021 free cash flow, profit target after Q2 results

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GE, Raytheon raise 2021 free cash flow, profit target after Q2 results

 GE, Raytheon raise 2021 free cash flow, profit target after Q2 results
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Summary

  • General Electric Co (NYSE: GE) raised its free cash flow target for the year from US$2.5 billion-US$4.5 billion to US$3.5 billion-US$5 billion.
  • The company said that all its industrial segments saw an improvement in profit margin despite Covid-related setbacks.
  • Raytheon Technologies (NYSE: RTX) raised the lower end of its 2021 fiscal revenue forecast from US$63.9 billion to US$64.4 billion but kept the upper-end outlook at US$65.4 billion.

General Electric Co (NYSE: GE) on Tuesday raised its full-year free cash flow target after positive second-quarter results, while aircraft manufacturer Raytheon Technologies Corp (NYSE: RTX) lifted its 2021 profit forecast after seeing increased demand for its engines during the same period.

GE raised its free cash flow target for the year from US$2.5 billion-US$4.5 billion to US$3.5 billion-US$5 billion after it beat analysts’ expectations for the quarter.

The Boston-based company reported a free cash flow of US$388 million in Q2, up from Wall Street estimates of a cash flow of US$287 million, according to Refinitiv data. Free cash flow is a critical metric for investors as it reveals the health of a company’s operations and debt repayment ability.

The stock was trading at 1.30% higher from the previous close at 10:21 am ET after the announcement.

GE Q2 stats

In the quarter ended June, GE’s revenue increased from US$18.28 billion to US$16.81 billion, logging an adjusted profit of 5 cents per share, compared to analysts’ estimate of 3 cents per share.

The company said that all its industrial segments saw an improvement in profit margin despite Covid-related setbacks, stressing that the business is showing "early signs" of recovery. CEO Larry Culp noted that the recovery is critical for delivering free a cash flow of US$7 billion by 2023.

Significantly, orders and revenue have returned to growth, he stressed in a press statement on the quarterly results.

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Likewise, Raytheon saw higher demand for its commercial engines and services, prompting the company to raise its full-year profit forecast. The Raytheon stock was up 3.03% at 10:21 am ET. It now raised its 2021 earnings forecast from US$3.50-US$3.70 to US$3.85-US$4.00 per share.

It also raised the lower end of its 2021 fiscal revenue forecast from US$63.9 billion to US$64.4 billion but kept the upper-end outlook at US$65.4 billion.

The Massachusetts-based company netted US$1.03 per share in the quarter, above the analysts' estimate of 93 cents per share. Additionally, its net sales jumped 13% to US$15.88 billion YoY.

It reported an operating cash flow of US$1.3 billion from operations and the repurchase of US$632 million worth of RTX shares. The company revised its adjusted EPS from US$3.50-US$3.70 to US$3.85-US$4.00, and free cash flow from around US$4.5 billion to US$4.5-US$5.0 billion.

Raytheon CEO Greg Hayes said the strong second-quarter results reflected the company’s robust growth in the defense business and ability to exploit the recovery of the commercial aerospace industry. He added that it would continue to focus on excellence and cost reduction to boost growth.

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Raytheon’s Q2 stats

Its net income from continuing operations was US$1,040 million, the adjusted net income was US$1,565 million, and the operating cash flow was US$1,326 million in the quarter. Its capital expenditures were US$360 million, causing in free cash flow of US$966 million.

Please note: The above constitutes a preliminary view, and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.

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