What happened

Shareholders of General Electric (GE 8.28%) woke up to a sunny outlook for their stock this morning -- and an 8.4% pop in its price, through 10:15 a.m. ET.

The reason: This morning, GE held a "virtual investor meeting" at 7:30 a.m. ET, reaffirming prior estimates for full-year revenue, earnings, and free cash flow. Investors were pleased with the news, and they're voting with their wallets, in favor of GE stock.  

So what

Here's a quick rundown of what the industrial giant revealed this morning, courtesy of minute-by-minute reporting from news site The Fly:

First and foremost, GE insists it's on track to generate high-single-digit revenue growth this year. Depending on your definition of "high," this might imply sales of anywhere from $63.5 billion to $65 billion, once you subtract the $18.5 billion in revenue last year that came from GE Healthcare (GEHC 2.29%), which is now a separate company. Compared to Wall Street's forecast of less than $62 billion in fiscal 2023 revenue, that sounds like good news for GE.

Earnings are a bit trickier. The company is forecasting an adjusted profit between $1.60 and $2 per share -- $1.80 at the midpoint. On the one hand, that's less than the $1.94 consensus on Wall Street. On the other hand, it's no worse than what GE had previously forecast, and leaves open the possibility that it might meet or even beat the analyst consensus.

Last but not least is free cash flow. GE is sticking with its plans to generate between $3.4 billion and $4.2 billion worth this year. At the midpoint, that's only $3.8 billion, which is below the $4 billion that it's expected to generate this year, according to forecasts collected by S&P Global Market Intelligence. But at least it's not less than what GE has already promised.

Now what

On balance, however, GE does seem to be declaring pretty clearly that it's not going to beat most of Wall Street's numbers this year, and might not even meet them. Considering that none of this is really news at all, I'm not clear on why investors are taking the revelations this morning as good news -- certainly not good enough to justify driving up the stock price by 8%, and adding $7.7 billion to GE's market cap!

Even assuming the company hits its numbers this year, at a recent market capitalization of more than $103 billion, the stock costs more than 27 times current-year free cash flow (that it hasn't even generated yet).

That might be OK if it were growing its profits well into the double digits, but based on GE's own forecast, it seems the company expects both free cash flow and adjusted earnings to shrink by more than 20% this year. To me, that seems like a much better argument for selling GE stock today than for buying it.