GE - The Bigger They Are, The Stronger They Grow

This article was originally published by GuruFocus on April 28, 2014
 

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf
 

Earlier this month, General Electric (GE) reported its first quarter results. The company is now refocusing on its core area, the industrial business, as opposed to GE Capital. Over the last five years, the top and bottom-line growth of its industrial segment has remained in the low-single-digits. 

However, three of its biggest industrial segments have started this year with double-digit growth.

Although General Electric has witnessed a decline in revenues, that was largely due to the smaller contribution from GE Capital. Its core area, the industrial unit, continues to grow. Moreover, the company is also eyeing significant margin expansion of the industrial unit through 2016.

GE Misses But I Am Staying Bullish

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

General Electric Will Light Up 2014

This article was originally published by TheStreet and also appeared on Yahoo! Finance

By Sarfaraz A. Khan. Research Assistant: Gohar Yousuf

NEW YORK (TheStreet) -- Technology and infrastructure giant General Electric (GE_) began the year by focusing on growth of its industrial business and improvement in margins. GE, the world's leading jet engine and medical scanner maker, is now moving forward with its plan to reduce its reliance on the financial sector. For 2014, GE is targeting up to a 5% increase in sales, while its industrial division could contribute up to 70% of profits. With cost cutting measures and top-line growth, the business will consistently improve its profitability through 2016.

Over the next couple of years, GE is looking for significant growth in international markets, driven by China and other regions rich in natural resources. The company's takeover strategy will fuel its inorganic growth. Meanwhile, General Electric will continue rewarding shareholders through dividends and buybacks. The business also gives an attractive yield of 3.20%, which is twice as big as the industry's average.

I am staying bullish on General Electric. The business's stock dropped by nearly 2% recently, to $27.48 at market close on Friday, on slightly negative news. I believe this makes General Electric a strong buy.