General Electric Co. (NASDAQ:GE) Earns Higher than Expectations

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By Erik Waters on October 17, 2014 Automobile

General Electric Co. (NASDAQ:GE) reported their quarter earnings on Friday. The profit generated was a little higher than expectations. General Electric Co. (NASDAQ:GE) took cost-cutting steps which helped boost margins in all industrial operations of the company. The company’s shares increased by 4% and achieved a cost of $25.21 in premarket trade.

The organic revenue of the company increased by 4 percent; this does not include General Electric Co. (NASDAQ:GE)’s acquisitions of industrial manufacturing businesses. Meanwhile, the CEO, Jeff Immelt, is shifting the company’s focus on these acquisitions. General Electric Co. (NASDAQ:GE) had a projected range of 4 – 7% growth in the current fiscal. So, they are satisfied with the revenue generated, which will probably meet the higher end of this range. Meanwhile, some of the analysts had better expectations from the company in terms of revenue.

Tim Ghriskey, from Solaris Asset Management, a company which owns the shares of General Electric Co. (NASDAQ:GE), believes that it will be a great pickup for the company if it manages to attain its high end. Most of the earnings were generated in industrials, but still, the revenue generated was very weak. Currently, the stock shows better results than those shown by the third-quarter earnings, according to Ghriskey.

Global concerns about a soft economy lead to underperformance of several U.S. manufacturers including General Electric Co. (NASDAQ:GE). Immelt believes that his company is doing very well because infrastructure growth opportunities continue to exist in the increasingly volatile environment. The company wants to increase the earnings contributions of the industrial businesses by 75% by the fiscal 2016. The industrial businesses include equipment for oil and gas and jet engines.

The net income for the third quarter for General Electric Co. (NASDAQ:GE) increased to 35 cents a share from 31 cents a share in the previous year during the same quarter. The company earned $3.54 billion. After excluding special items and costs of pensions, the company had earned 38 cents per share, which was 1 cent over the estimates of analysts. Revenue increased by 1% to$36.17 billion, which was also lower than the analysts’ expectations of $36.79 billion.

The company’s largest industrial division is the power and water segment; it sell turbines that are used in the production of energy. The sales for this division decreased by 2%, yet, the company has projected a growth rate of 10% in its water and power segment in the fourth quarter.

The profit margin for the industrial businesses of the company was 16.3% after expanding 0.9% than last year. The company pointed out the gap between the selling price and the production price of the products and mentioned its cost-cutting efforts to achieve simpler operations. General Electric Co. (NASDAQ:GE) has set new targets for itself; the profit margins are set at 17% by 2016 for the industrial businesses which is higher compared to the 15.7% margin last year. The expansion shown by the company in this quarter is enough proof that it is on its way to achieve its goals.