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General Electric Beats With Revenue Jolt (Update 2)

In the Aviation segment, fourth-quarter revenue was $5.467 billion, increasing from $4.781 billion the previous quarter, but declining from $4.924 billion a year earlier. Fourth-quarter segment profit was $1.039 billion, compared to $924 million in the third quarter, and $850 million in the fourth quarter of 2011.

Healthcare revenue during the fourth quarter totaled $5.183 billion, increasing from $4.307 billion the previous quarter, and $5.163 billion a year earlier. Profit for the segment was $1.021 billion in the fourth quarter, increasing from $620 million billion in the third quarter, and $953 million in the fourth quarter of 2011.

GE Capital

GE Capital's fourth-quarter revenue totaled $11.770 billion, increasing from $11.369 billion the previous quarter and $$11.577 a year earlier. Fourth-quarter profit for the finance segment was $1.808 billion, compared to $1.679 billion in the third quarter, and $1.660 billion in the fourth quarter of 2011.

Following the $1.0 billion payment to the parent company, GE Capital's Tier 1 common equity ratio was 10.2% as of Dec. 31, which was the same ratio as in the previous quarter. GE Capital paid dividends totaling $6.4 billion to the parent company during 2011.

Parent and Stock

The company said it returned $12.4 billion to shareholders during 2012, through dividends and $5.2 billion in share buybacks.

General Electric's shares closed at $21.30 Thursday, up 1.5% year-to-date. The shares returned 21% during 2012, following a 1% return during 2011.

The company on Dec. 14 raised its quarterly dividend by two cents to 19 cents, for a yield of 3.57%, based on Thursday's closing price.

The shares trade for 12.7 times the consensus 2013 EPS estimate of $1.67. The consensus 2014 EPS estimate is $1.84.

Analyst Reaction

JPMorgan analyst Steven Tusa said in a note before the market open that the quality of General Electric's fourth-quarter earnings "was generally solid with revenues +3% vs JPM (+1% vs Consensus), Industrial margins better (+20bps vs JPM), GE Capital in line (with a 6% tax rate higher than expected) and the net of corporate/tax in line with our model."

With Immelt having carefully reduced his guidance for GE's 2012 organic growth in December to 8% from his 10% estimate in September, Tusa said "expectations were as low as they've been for some time," reflected by the relative underperformance of the shares, and that investors were "bracing for sloppy print."

"In that context, there is no debate that the details are better than feared."

Tusa rates General Electric "Overweight," with a $24 price target.

Interested in more on General Electric? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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