This article was originally published by GuruFocus
By Sarfaraz A. Khan, Research Assistant Gohar Yousuf
March 4, 2014
Last month, General
Electric (GE) reported results for the final quarter
of 2013, which disappointed investors as the company’s margins were below
expectations. The company’s shares have fallen by 7% since the earnings release
and look attractive for long term investors. The company is eying improvements
in sales and profitability in the near future. At these price levels, the
company offers attractive yield of 3.48%, which is considerably above the
industry’s average of just 1.65%.
Earnings and Revenue Growth
In its previous
quarterly results General Electric witnessed a 4.8% year-over-year growth in
earnings to $4.20 billion. The company’s adjusted earnings came in line with
consensus estimate of $0.53 per share. The earnings growth was driven by strong
performance in oil and gas, aviation and financing (GE Capital) businesses.
This is shown in the picture below.
[Chart01]
With the
exception of energy management, General Electric has managed to grow its income
in all of its operating areas. Energy management’s decline had a small impact
on General Electric’s bottom line as it is one of the smallest segments of the
company. The underperformance of this segment, however, was one of the main
reasons why the company missed its profitability target (discussed later in the
article).
General Electric
gets 31% of its total segment profits from GE Capital, 24% from the power &
water segment and 16% from the aviation segment.
Overall, this
was not a poor performance.
General
Electric’s earnings growth has come on the back of … read full article at
GuruFocus
