GE Brings Good Sales Growth Guidance to Life in Third Quarter Report
General Electric (GE 24.25) reported its third quarter results this morning and in true General Electric fashion it managed to top analysts' EPS expectations by a penny, aided by share buyback activity and solid expense management. To wit, operating earnings increased 6% to $0.38 per share with revenues up just 1% to $36.2 billion.
GE's largest division -- Power & Water -- saw revenues slip 2% from the year-ago period to $6.38 billion and its profit decline 8%. That weakness was offset, though, by a 7% jump in revenue and a 27% increase in segment profit for its Oil & Gas segment.
Total industrial segment revenue was up 3% for the period to $26.63 billion while total industrial segment profit increased 9%. GE Capital revenue was down 1% to $10.45 billion and its profit declined 22% to $1.49 billion.
GE said orders for its industrial segment were up 22% in the quarter, with increases in five of six segments. Growth market orders jumped 34%. Notably, the company now expects industrial organic revenue growth for the year to be at the higher end of the 4-7% range. Industrial segment organ revenue growth was 4% in the third quarter.
GE's backlog of equipment and services at the end of the quarter was $250 billion, up 9.2% from the same period a year ago. Year-to-date, GE said it has generated $7.2 billion in cash from its operating activities.
Notwithstanding its steady operating performance, shares of GE have languished this year. To be sure, the stock hasn't been helped much lately by the plunge in oil prices and heightened concerns about the pace of global economic growth. GE derived 53% of its revenue last year outside the U.S. (17.3% from Europe).
For years General Electric brought good things to life. Now, if only it could bring its stock price, which is down 13.5% year-to-date, to life.
The upbeat organic revenue growth guidance in today's report and a current dividend yield of 3.70% look to be helping. Shares of GE are indicated 3.7% higher in pre-market trading
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