Davis estimates that fourth-quarter Oil & Gas revenue will grow by 1% year-over-year to $4.124 billion, saying that "top-line growth and operating margin expansion will likely be driven by continued secular trends such as expanded production capacity, aging pipelines, and growth in unconventionals (LNG) & subsea," and that the segment "should continue to expand internationally with emerging markets a key focus area, investing in research/manufacturing capabilities in such areas as Brazil, Russia, Africa, SE Asia, etc."


For the company's Energy Management segment, Coe expects to see revenue fourth-quarter revenue of $2.149 billion, saying "we model 10% year-over-year growth vs. 16% growth in 3Q12 driven by backlog conversion.

Davis said that "with 1-2% operating margins, the newly split-out Energy Management segment should be a key area of focus for improvement. GE believes Energy Management should be a 10% margin business; peers are at 10-15%." Davis expects fourth-quarter revenue to total $2.032 billion, increasing 4% from a year earlier.

GE's Stock: Growth and Income

General Electric's shares closed at $21.12 Wednesday, up slightly year-to-date. The shares returned 21% during 2012, following a 1% return during 2011.
General Electric on Dec. 14 raised its quarterly dividend by two cents to 19 cents, for an attractive yield of 3.60%. The company also increased its share repurchase authorization by $10 billion and extended its buyback plan through 2013. Under the company's previous buyback plan, the company was authorized to repurchase up to $4.9 billion worth of shares as of Sept. 30.

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

Coe rates GE "Equal Weight," with a $23 price target, estimating the company will post fourth-quarter earnings of 43 cents a share, with a 2013 EPS estimate of $1.65, increasing to $1.72 in 2014.

Davis rates GE "Overweight," with a $25 price target, saying that a "sector-high dividend yield and a bullish view on US gas powergen keeps us in favor of an Overweight rating on the stock," adding that "potential catalysts include powergen orders picking up, further share repos, corporate dividend announcements, and potential portfolio actions."

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