General Electric Co. (NYSE: GE) reported Q4 earnings of $0.53 per share today (Friday) on adjusted profit of $5.4 billion. The profit figure was up from $4.7 billion the previous year, and earnings per share (EPS) matched analysts' projections exactly.
The 4.8% profit increase is music to investors' ears, but the best news came from GE's industrial divisions.
GE's industrial businesses reported revenue of almost $30 billion - a 6.1% increase from the previous year. On the flip side, GE Capital's revenue was down 4.5% to $11.1 billion.
While that might seem like mixed news, General Electric deemphasized GE Capital throughout 2013 and placed a higher focus on its industrial segments. The fact that GE has diversified its revenue streams and posted a total profit increase of 4.8% is great news for investors.
The increase in industrial revenue shows that GE's emphasis on the aerospace and energy industries is paying off.
General Electric has been developing engines for The Boeing Co.'s (NYSE: BA) 777X jetliner. In November, GE cashed a check for $26 billion on engine orders. On the energy front, GE sold $2.7 billion in gas turbines to the Algerian power company Sonelgaz in September.
General Electric also reported that it cut expenses by $1.6 billion in 2013.
GE stock was trading down about 3% early Friday morning. Investors shouldn't worry, however.
For those looking to get in on GE stock, the 3% drop offers a cheaper avenue. Conglomerates like GE are strong foundational plays for any portfolio, and today's report from General Electric only strengthens the case for owning GE stock.
"Own a diversified industrial conglomerate that pays a good dividend; maybe General Electric is a good start," Money Morning Event Trading Specialist Shah Gilani told Money Morning readers Wednesday. "This position plays on the industrial base of machinery, goods, and services that are all necessary for an increasingly industrialized world."
This GE earnings analysis updates this previous post:
General Electric Co. (NYSE: GE) will report earnings Friday morning, and analysts are projecting earnings per share of $0.53 on revenue of $40.2 billion.
The $0.53 EPS estimate is a 20% increase from General Electric's 2012 Q4 earnings. Likewise, the revenue estimate is 2% higher than the $39.3 billion revenue GE reported in the previous year.
However, the biggest takeaway from GE's earnings report will be the diversification of its revenue streams.
General Electric has made some strategic changes lately, chief of which was taking the focus off of the GE Capital division. Moving away from the media business and getting back to its roots in the industrial sector was another major change.
In Q3, General Electric reported that less than 30% of its revenue was generated by its GE Capital division. Before the financial crisis of 2008, the GE Capital had accounted for more than 40% of GE's revenue.
General Electric is now focusing heavily on the aerospace industry and has been developing engines for The Boeing Co.'s (NYSE: BA) 777X jetliner. GE made headlines in November when it received $26 billion in orders for the engine from three Middle Eastern countries.
Similarly, General Electric has increased its efforts in the energy industry - particularly wind and subsea energy. Any success General Electric sees in the energy industry will be clearly reflected in the conglomerate's revenue.
Shareholders have been pleased with GE's direction, and GE stock has climbed 28.6% since last January. More recently, GE stock has gained 11.5% in the last three months.
General Electric (GE) stock closed down 0.51% Thursday at $27.20.
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GE Tumbles After Profit-Margin Growth Trails Immelt's Forecast
The Wall Street Journal:
GE Earnings Rise 4.8% on Energy, Aviation Growth