General Electric reported lower-than-expected quarterly earnings on Tuesday but its shares rose as investors focused on the strong cash flow that finished the year.

For the fourth quarter, GE earned 8 cents per share on an adjusted basis, missing analysts’ estimates of 9 cents per share. But the company closed the quarter with $4.37 billion in industrial free cash flow, a surprise after CEO Larry Culp projected at least $2.5 billion for the last three months of the year.

The strong quarter pushed the company’s industrial free cash flow into positive territory for the year.

“As 2020 progressed, we significantly improved GE’s profitability and cash performance despite a still-difficult macro environment,” Culp said in a news release. “The fourth quarter marked a strong free cash flow finish to a challenging year, reflecting the results of better operations as well as strong and improving orders in Power and Renewable Energy.”

The stock jumped 2.7% to $11.29 as GE also projected it would generate $2.5 billion to $4.5 billion in industrial free cash flow for 2021.

“Some investors are bullish on the company’s turnaround under Culp, especially as he forecasts positive cash flow for 2021,” CNBC said. “GE has continued to pay down its debt during the pandemic and cut costs through, for example, layoffs in its aviation business.”

General Electric strengthened its balance sheet over the past three months, engaging in partnerships, acquisitions, and cost-saving initiatives that reduced pension debt by $2.5 billion. The company has reduced total debt by approximately $14.5 billion in 2020 and $28 billion since the start of 2019.

Gordon Haskett analyst John Inch cautioned, however, that “strong free cash has been a hallmark of the recession for almost all industrial companies that have released working capital due to weak sales.”

In the fourth quarter, GE’s revenue rose 16% to $21.93 billion, topping estimates of $21.83 billion, as an increase in orders in the power and renewable energy businesses offset declines in aviation and health care.  

The power business reported a 26% increase in orders to $5.62 billion, driven largely by strong sales of gas power equipment.

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