Photo by Yiorgos Ntrahas on Unsplash

On the factory floor, General Electric looks very different since Larry Culp became chief executive. Its aviation plant in South Carolina, for example, now gets blades out 10 days sooner thanks to his almost religious fervor for squeezing out efficiencies. Yet one thing looks the same as when Culp started: GE’s market capitalization, which on Monday was $99 billion. He is delivering what he can, but investors seem to be losing patience with things outside of his control.

GE gave some good news on Tuesday. Earnings for the first quarter of $262 million were a bit better than analysts had expected, according to Refinitiv. Demand for servicing planes at its jet-engine business, the biggest part of the U.S. conglomerate, has revived as passengers retake the skies. But at GE good news usually comes with bad, and this time it’s inflation and supply chain challenges. In the aviation business, that meant difficulty getting hold of parts and labor. Culp says company-wide earnings for the full year may be at the bottom end of its previous forecast.

Each of GE’s divisions is facing its own combination of unfortunate external forces. Healthcare revenue growth of 2% would have been 9% if it weren’t for trouble getting hold of electronics, Covid-19-related delays to hospitals’ plans to deploy GE kits, and scarce construction materials. The renewable energy business didn’t hit its potential because of, among other things, uncertainty surrounding political support for green energy incentives.

The problem is, that unforeseen headwinds are becoming a constant in Culp’s time as GE’s leader, and it’s weighing on the shares, which fell more than 9% on Tuesday. GE has underperformed the S&P 500 Index since his anointment, and its total shareholder return over that time is negative whereas rivals like Siemens and Honeywell International are positive.

More troublingly, it looks like the value investors place on Culp’s optimism is dwindling. The GE chief reckons he can still deliver the $7 billion of free cash flow previously targeted for 2023, suggesting today’s problems won’t be tomorrow’s. But the $10 billion fall in GE’s market value on Tuesday says otherwise. Since Culp pledged in November to split GE into three new companies, the stock has fallen by a quarter. Costs are going up, but confidence in GE’s turnaround is not.