CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

GE raises full-year earnings forecast

By Daniel Tyson


Updated

GE building
GE building – Photo: Shutterstock

General Electric said Tuesday it has revised upward its full-year earnings per share forecast.

GE, once a cornerstone of American manufacturing, said it now expects adjusted profits for 2021 in the range of $1.80–$2.10 per share, versus earlier estimates of $1.20–$2 per share, according to the company’s third quarter earnings release.

GE also narrowed the expected range for industrial free cash flow to $3.75–$4.75bn from $3.5bn–$5bn and said industrial organic revenue will be flat compared to the previous outlook of low-single digit growth.

The industrial division comprises aviation, healthcare, renewable energy and power.

At the opening bell Tuesday on Wall Street, the Boston-based company was trading at $105.45 per share, but shot up to $108.24 within 10 minutes, a gain of nearly 3%.

Third quarter earnings

During a conference call, chief executive Larry Culp said the conglomerate is facing a “challenging” operating theatre hindered by the global supply chain disruptors, onshore wind markets and the possibility of a hefty tax hike and reduced tax credits under US President Joe Biden’s infrastructure bill.

GE’s third quarter earnings beat Wall Street’s expectation, but it missed forecast.

Total revenue fell 1% from Q3 2021 to $18.43bn (£13bn) while spending was slashed 8%, according to a press release. Wall Street expected a 4% increase in revenues to $19.8bn. Revenues from the aviation division increased 10%, but declined in healthcare (-5%) and renewable energies (-7%). Power revenue was flat.

Adjusted profit for Q3 came in at $0.57 a share, up from $0.38 year over year. Analysts expected GE an adjusted profit of $0.43 per share.

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For 2022, the company predicts revenue increase, margin expansion and a higher cash flow.

Read more: General Electric sparking back to life

The difference between stocks and CFDs

The main difference between CFD trading and stock trading is that you don’t own the underlying stock when you trade on an individual stock CFD.

With CFDs, you never actually buy or sell the underlying asset that you’ve chosen to trade. You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional stock trading you enter a contract to exchange the legal ownership of the individual shares for money, and you own this equity.

CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional stock trading, you buy the shares for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks.

CFDs attract overnight costs to hold the trades, (unless you use 1-1 leverage)

which makes them more suited to short-term trading opportunities. Stocks are more normally bought and held for longer. You might also pay a stockbroker commission or fees when buying and selling stocks.

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