General Electric Company
(GE) reported third quarter 2012 earnings from continuing
operations of 36 cents per share, in line with the Zacks
Consensus Estimate. However, earnings were up a robust 50% from
the prior-year quarter. This was the 10th consecutive quarter of
double-digit growth in operating earnings for the company.
Profits were primarily driven by strong positive growth across
all of GE's Industrial segments (for the first time since the
third quarter of 2005) with Energy Infrastructure, Transportation
and Home & Business Solutions posting double-digit
On a GAAP-basis, earnings were 33 cents a share, 8.3% below
the Zacks Consensus Estimate. However, earnings were up 43% year
over year on a GAAP basis.
Revenues for the quarter came in at $36.3 billion, up 3% year
over year. Unfavorable foreign currency translation impacted the
top line by $1.1 billion. Industrial revenue grew 7%, while
organic growth was 8%. Strong performance of the Industrial
portfolio was driven by solid profits in the Energy and
Orders in the Industrial segment growth market increased 4%
year over year, excluding the effects of Wind and foreign
currency translation. Year to date, orders were up 4% with four
out of the five business divisions reporting profit. During the
reported quarter, pricing on orders also inched up 0.1%.
Infrastructure orders for the quarter were down 5% at $21.5
billion, due to a decrease in orders for wind turbines.
Revenue by Segment
During the reported quarter, Energy Infrastructure (12%) and
Transportation (5%) segments posted strong revenue growth
followed by Home & Business Solutions (1%). However, Aviation
and Healthcare segments each posted a revenue decline of 1% for
the quarter. GE Capital reported a 5% decline in revenues due to
a decrease in Commercial Lending and Leasing (-9%) and consumer
Margins, Balance Sheet and Cash Flow
Operating income for the quarter grew 4% year over year while
operating margin expanded 70 basis points (bps) to 11.1% as
negative impact of foreign currency translation was fully offset
by cost reduction measures.
Exiting the quarter, cash generated from operating activities
was $10.7 billion, up 63% and cash and cash equivalents were $134
General Electric is positive about its performance in fiscal
2012. The Industrial division is expected to continue to benefit
from strong growth in the Transportation, energy and Aviation.
Profits at GE Capital are expected to be driven by lower losses
and real estate turnaround.
General Electric currently holds a Zacks #3 Rank, which
implies a short term 'Hold' rating.
GENL ELECTRIC (GE): Free Stock Analysis
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