General Electric (GE) Beats the Street on Third Quarter Earnings

Shares of the General Electric Company were trading down -0.10 or -0.36 percent to $27.93 in Friday’s premarket after news that the company had beat street estimates for its third quarter earnings which were released early this morning. General Electric stock closed at $28.08 per share, up +0.43 or +1.56 percent in Thursday’s regular trading session.

Fairfield, Connecticut based General Electric is an American multinational conglomerate best known as a manufacturer of electrical appliances.
The company, founded by Thomas Edison in 1892 has expanded into aviation, consumer electronics, oil and gas production and exploration, electric motors, locomotives, software, lighting, healthcare, energy and finance among other businesses. The company is divided into several divisions, which include Aviation, Capital, Energy Management, Healthcare, Oil and Gas, Power and Water and Transportation.

General Electric reported a profit of $2.51 billion or $0.25 per share in the third quarter, down 29 percent from the same period one year ago, while revenue came to $31.68 billion, a decline of one percent from last year. Adjusted for discounted operations and non-recurring costs, earnings came to $0.32 per share, while industrial and vertical earnings per share came to $0.29 per share. Analysts expected the company to report earnings of $0.26 per share on revenue of $28.67 billion.

Jeff Immelt, GE’s Chairman and Chief Executive Officer stated in the earnings announcement that, “GE is executing and is on track to deliver on its 2015 goals. Our portfolio transformation is happening at an unprecedented pace. We have a focused infrastructure business with leading capabilities in our markets. We are positioned to grow faster than our competitors, with a strong dividend. We are growing operating and gross profit margins, executing our cost-out initiatives, and making corporate smaller. We have a $199 billion backlog of services that positions the Company well for any cycle. We are transforming GE into the world’s premier Digital Industrial company, in a unique position to drive outcomes for customers and grow margins.”

Due to continued low oil prices, the GE oil and gas unit saw revenue decline by -16 percent in the quarter to $3.87 billion. The company’s power and water unit, which makes power generators and other equipment increased one percent to +$6.46 billion, while the aviation unit’s revenue increased +3 percent to $1.59 billion and the appliance unit revenue rose to $2.29 billion, an increase of +8 percent.

Mr. Immelt said that the company was ahead of plan in the divesting of its assets; so far, the company has signed $126 billion in depositions including last week’s sale of its commercial lending business to Wells Fargo (WFC) for $30 billion. The company expects total dividends of $3 billion paid out in 2015 and said it was on track to pay out $18 billion in 2016.

In addition, GE announced its plans to launch the Synchrony share exchange to divest the company’s Synchrony lending business, which will significantly reduce the amount of GE shares outstanding. Through dividends and the Synchrony share exchange, the company expects to return as much as $30 billion to shareowners this year.

GE stock is up approximately +11 percent so far this year, which compares quite favorably to the S&P 500 index increase of two percent in the same period. With its share exchange program and future dividends, as well as the ongoing divestiture of assets continues making GE stock a solid investment.

Other News About GE

GE Ready to Return $30 Billion to Investors as Synchrony Share-Swap Nears

Share swap for the company’s lending unit will begin next week.

General Electric to Sell $30 Billion Commercial Leasing and Lending Business to Wells Fargo

Sale includes management, 3,000 employees and GE’s Capital Vendor Finance and Commercial Distribution platforms.

Other Stocks in the News

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Honeywell posts rise in quarterly earnings on lower sales, backs 2015 view

Company beat street expectations and backed its forecast for earnings per share of $6.10 for 2015.

Published on Oct 16, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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