General Electric Beats by a Penny (Update 1)

  • General Electric reports first-quarter operating earnings per share of 34 cents.
  • Analysts were expecting EPS of 33 cents.
  • GE Capital earnings rise 10% sequentially.

Updated with comments from BernsteinResearch analyst Steven Winoker.

NEW YORK ( TheStreet) -- General Electric ( GE) on Friday reported that first-quarter operating earnings increased 3% year over year, but would have risen 17% excluding one-time items.

The company reported first-quarter operating earnings of $3.6 billion, or 34 cents a share, compared to $4.2 billion, or 39 cents a share, during the fourth quarter, and $2.3 billion, or 21 cents a share, during the first quarter of 2011.

The first-quarter earnings came in ahead of the 33-cent estimate among analysts polled by Thomson Reuters.

Total first-quarter revenue was $35.2 billion, compared to $38.0 billion the previous quarter and $36.6 billion a year earlier. Revenue for the first quarter exceeded the consensus revenue estimate of $34.7 billion.

The 8% year-over-year revenue decline reflected the one-time gains from the company's sale of 51% of its stake in NBC Universal in the year-earlier period.

CEO Jeff Immelt touted the company's "double-digit Industrial earnings growth and the return of the GE Capital dividend to the parent."

Immelt also said that GE "witnessed broad-based strength in orders across all our Infrastructure businesses and in both equipment and services," and saw "encouraging leading indicators driven by global growth."

GE Capital saw a $1.8 billion profit during the first quarter, but excluding the $381 million gain during the fourth quarter of 2011 from its sale of Garanti Bank, the financial segment's profit increased 27% year over year.

GE Capital's revenue declined 12% from a year earlier to $11.4 billion.

Total industrial segment revenue was $23.7 billion during the first quarter, increasing 14% year over year, with gains in all five industrial groups, including a 41% increase in revenue for Transportation to $1.3 billion. Energy Infrastructure revenue increased 18% to $11.2 billion, while Aviation revenue increased 12% to $4.9 billion.

Total industrial segment profit grew 10% year over year to $3.3 billion.

The company said that "infrastructure orders were a record high for the first quarter at $23.1 billion, up 20% from the prior year," while "industrial growth market orders were up 21%," and that "all businesses grew equipment orders at double-digit rates for the quarter."

BernsteinResearch analyst Steven Winoker rates General Electric ⿿Outperform,⿝ with a $22 price target, and said on Friday morning that ⿿this quarter is a mixed bag for investors,⿝ while Bernstein⿿s ⿿two most important investment issues (dividend, orders) continue to progress positively: industrial orders are trending up and we even heard of ⿿positive pricing⿿⿝.

Winoker added that GE capital was continuing ⿿to improve, including higher levels of Tier 1 Common Capital which continue to set it up for a dividend to the parent.⿝

On the negative side, the analyst said ⿿it appears that lower tax rate and provisioning supported the earnings estimate beat,⿝ and that ⿿taking a strict view even on just the tax rate, we could easily interpret the ⿿clean number⿿ as more of a miss relative to our expectations.⿝

GE's shares closed at $19.14 Thursday, and are up 8% year to date.

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The shares trade for 11 times the consensus 2013 EPS estimate of $1.76. The consensus 2012 EPS estimate is $1.54.

Based on a 17-cent quarterly payout, the shares have a dividend yield of 3.55%.

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

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

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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.