Tag Archives: GE

United Technologies: Bottom Line Improvement Continues [Seeking Alpha]

United Technologies Corporation (UTX) is a diversified conglomerate, providing high technology products and services to the building systems and aerospace industries worldwide. Despite the mixed earnings results, UTX continues to hold strong cash position while focusing on integration to boost profitability.

Mixed Results

For Q1, 2013, revenue increased to $14.4B, which is below analysts’ estimate of $14.9B. However, net income of $1.39 per share is well above the estimate of $1.29 per share. The management also reaffirmed a forecast for full-year profit of $5.86-$6.15 per share on $64B-$65B of sales.

Declining Organic Sales due to Tough Market Conditions

The acquisition of Goodrich and IAE had provided $0.21 of earnings for Q1; however, organic sales declined 2%. However, North America and emerging markets continue to recover while Europe continues to be a headwind. On the positive side, UTX’s portfolio is well positioned for a resumption of top-line growth as the year progresses on.

Integration, Growth, and CapEx

Climate, Controls and Securities continued to realize savings from the integration (profit increased 8% while organic sales declined 3%). Otis, on the other hand, is gaining momentum with two consecutive quarters of sales growth. The CapEx for the quarter was $295M, which was up 60% comparing to the same quarter last year, as the company prepares for the ramp in commercial aerospace.

Read MORE.

General Electric: Disappointed? Focus On Its Cash Position And Backlog [Seeking Alpha]

General Electric Company (GE), with a market cap of $226.16B, is a diversified technology and financial services company and a leader in all markets in which it competes. On April 19, 2013, GE reported in-line operating profit of $3.6B or 35 cents per share. However, GE’s share price dropped more than 4% due to declining revenue from the industrial end.

The Good and Bad for Q1, 2013

For Q1, GE reported the continuing operations revenues of $35B. Industrial sales were down 6% to $22.3B. Power and water dragged the overall results, whereas Europe services remained tough. The industrial segment profits were about $200M below the management’s expectations due to the worsening condition in Europe and some short cycle push outs from March into Q2. The gap was offset by cost control and better than expected GE Capital performance. Further, shipments should improve significantly in the second half.

GE Capital continued to improve and delivered a solid quarter. The ending ENI balance was reduced by $17B, and the earnings had increased to $1.93B as compared to $1.8B in Q4, 2012. The GECC Tier 1 common ratio had increased to 11.1%, as seen from the table below.

Read MORE.

3 Conglomerates On The Long-Term Uptrend [Seeking Alpha]

While the S&P 500 had gained 11.44% year to date, leading conglomerates stocks had been outperforming the market, including General Electric Company (GE) with 13.10% increase, United Technologies Corporation (UTX) with 15.96% advance, and Textron Inc. (TXT) with 20.10% surge as seen from the chart below.

(click to enlarge)

Source: Google Finance

General Electric Company

General Electric Company (GE), with a market cap of $240.41B, is a diversified technology and financial services company and a leader in all markets in which it competes.

GE’s latest M&A move was to acquire Lufkin Industries Inc. (LUFK), which is a move to take advantage of an oil-drilling boom, as reported by Bloomberg. It is a move for GE to buy the synergies and growth, as said by an analyst at William Blair & Co. GE continues to expand into the industrial end and shrink GE Capital, where the last reported ENI balance had been reduced to $419B in Q4, 2012 as compared to $461B in Q1, 2011. GE also took a notable step to divest its 49 percent stake in NBC Universal on February 12, thus to better focus on the industrial market as well as return more capital to shareholders while retaining more cash for future M&A.

Analysts currently have a mean target price of $25.60 for GE, suggesting 10.73% upside potential. Analysts, on average, are estimating an EPS of $0.35 with revenue of $34.70B for the current quarter ending in March, 2013. GE is expected to report its Q1, 2013 earnings on April 19, 2013. In the last four quarters, GE had three positive surprises and one in-line result.

Read MORE.

 

GE: Improving Baseline With More Focused GE Capital [Seeking Alpha]

General Electric Company (GE), with a market cap of $239.26B, is a diversified technology and financial services company and a leader in all markets in which it competes. While all industrial segments had positive earnings growth with expanding margins in the last quarter, the progress of GE Capital (which comprises around 28.6% of GE’s value currently) had significantly improved GE’s bottom line in the past 2 years.

Improving GE Capital, Declining ENI Balance and Improving Earnings

The management continues to shrink GE Capital while improving its quality. GE uses ENI, Ending Net Investment, to measure the size of GE Capital segment. Investors should monitor ENI Balance to quantify how GE is performing against its previously communicated goal to reduce the size of financial services segment.

Below is the detail for GE Capital’s ENI as of Q4, 2012:


(Click to enlarge)

In the past 2 years, ENI had declined from $461B to $419B and achieved progress every quarter. The GECC Tier 1 common ratio had also improved from 9.9% in Q1, 2011 to 10.2% in Q4, 2012. Most importantly, the earnings had improved from $6.6B in 2011 to $7.4B in 2012, with the breakdown seen in the table below.

Read MORE.

General Electric: A Better Buy After The Downgrade [Seeking Alpha]

General Electric Company (GE) is a diversified technology and financial services company and a leader in all markets in which it competes. GE was down 0.63% and closed at $23.62 on March 11, 2013. GE had been outperforming the market with 15.56% gain YTD (vs. 11.66% increase for Dow Jones).

Downgrade

On March 11, 2013, Nomura Securities downgraded GE from buy to neutral with a price target of $24.00 saying the positives are already reflected in the stock. Analyst Shannon O’Callaghan commented,

GE has made key positive steps in the last few years and sentiment has turned more positive. We applaud these positives, but we think they are now reflected in the valuation adjusting for accounting differences. The P/E (adjusted for accounting differences) is now in line with premier industrial peers despite GE still getting 40-45% of its earnings from GE Capital. On a comparable GAAP pension basis, we estimate GE’s 2013 P/E is 15.7x, which is a slight premium to peers EMR, UTX, and MMM. Given the 40-45% of GE’s earnings still coming from GE Capital, this implies GE’s industrial earnings are already being awarded a premium P/E. GE has made a lot of progress in the last few years, and we think portfolio moves such as these could be important next steps. At this stage we think a lot of the good news is priced into the stock, and we see more potential for outperformance elsewhere in our sector.

Analysts Estimates

Analysts currently have a mean target price of $25.07 and a median target price of $25.00 for GE. Analysts, on average, are estimating an EPS of $0.35 with revenue of $34.84B for the current quarter ending in March, 2013. For 2013, analysts are projecting an EPS of $1.68 with revenue of $149.59B, which is 1.50% higher than 2012.

Read MORE.

Demographics, Water Scarcity, And How To Invest [Seeking Alpha]

Accessibility to potable water had been improved compared to 30 years ago; however, long term trends for water scarcity are not too optimistic. According to Food and Agriculture Organization (FAO), “Water use has been growing at more than the rate twice of population increase in the last century. By 2025, 1.8 Billion people will be living in countries or regions with absolute water scarcity, and two-thirds of the world population could be under stress conditions.” Population growth and economic development are putting unprecedented pressure on renewable, but finite water resources.

Understand Water Scarcity

The term, “water scarcity”, needs to be understood as a relative concept, which is fundamentally dynamic. Water scarcity is defined in relation to needs and livelihoods where climate, geography and, increasingly, technological interventions determine the distribution of water around the world.

Read MORE.

General Electric: Refocusing With A Stronger Cash Position [Seeking Alpha]

General Electric Company (GE) is a diversified technology and financial services company and a leader in all markets in which it competes. GE is up 10.96% YTD and has been outperforming the market as of February 15, 2013. More positive developments continued to be seen for GE, which will be presented in this article.

NBCUniversal buyout deal: According to Reuters, “Stronger-than-expected growth in NBCUniversal’s entertainment unit gave Comcast Corp (CMCSA) the impetus to buy the rest of the company from GE two years earlier than expected.” NBCUniversal’s cable networks, which have become the main growth driver in the last few years for the industry, rose 3.3 percent to $8.77 billion last year. The numbers made an even stronger case for buying out GE’s 49 percent stake for $16.7B, valuing NBCUniversal at $39B.

Refocusing: By selling NBCUniversal earlier, it allows Jeff Immelt to refocus GE back on its industrial roots. “This allows GE to focus completely on the industrial business,” said Zahid Siddique from Gabelli Equity Trust.

Read MORE.

General Electric: Expanding And Riding The Economic Improvement [Seeking Alpha]

General Electric Company (GE) is a diversified technology and financial services company and a leader in all markets in which it competes. Since our last article titled “General Electric Continues To Work On Things That Matter,” GE had increased 6.13% and closed at $22.50 as of Jan. 29, 2013. GE’s share price was boosted by a solid, strong Q4 2012 earnings with an EPS of $0.44, which beat analysts’ estimate of $0.43.

Recent Highlights

Improving economy. The U.S. economy continued to grow and the orders for durable goods probably climbed in December 2012, showing stabilized U.S. manufacturing following a mid-year slump. Markit’s U.S. purchasing managers index rose to a preliminary reading of 56.1 in January, a 22-month high and up from 54 in December. Production, orders, and employment improved, where readings above 50 signal growth. China’s economy growth perked up in Q4 2012, with manufacturing expanding at the fastest pace in two years.

On Jan. 18, GE reported better-than-expected profit and sales, where revenue from China grew 19% in 2012 to just under $6 billion on increased demand for jet engines and medical equipment. As quoted from Jeff Immelt, “I’d say we definitely saw China strengthen again at the end of the year. The big drivers of China continue to be healthcare and aviation. We believe that China momentum will likely continue into 2013.” The earnings call transcript for GE’s CEO discussion of Q4 2012 results can be accessed here. Lastly, eurozone factory and service-sector activity contracted again, but appears to be stabilizing.

Read MORE.

General Electric Continues To Work On Things That Matter [Seeking Alpha]

General Electric Company (GE) is a diversified technology and financial services company and a leader in all markets in which it competes. GE continues to focus on the energy and power infrastructure market. This article will provide the recent developments for GE and analyze its fundamentals before the earnings.

New Orders

GE’s power conversion business won a $10 million contract to aid in the construction of the world’s largest wastewater treatment plant in Abu Dhabi. GE stated, “it would supply eight pump drive trains, each with a power of 6.38 megawatts, as part of pumping station work that’s making up a 40-kilometer (25- mile) wastewater tunnel to collect and transport used waters generated by the city.” The wastewater pumps power by GE drive trains will be able to treat as much as 70,000 cubic meters of wastewater an hour when the plant becomes fully operational in 2030.

GE won a contract worth more than $500 million to supply turbomachinery equipment and services to Petroleo Brasileiro (PBR), continuing to strengthen the relationship between two companies. As reported, the contract will serve the four new floating production storage and offloading units in the Cessao Onerosa region of the Santos Basin pre-salt fields in the state of Sao Paulo. The contract followed a September, 2012 deal in which GE signed a subsea wellhead production contract with Petrobras worth nearly $1.1 billion.

Read MORE.

General Electric Still Brings Good Things For Investors, Buy For 2013 [Seeking Alpha]

General Electric Company (GE) is a diversified technology and financial services company and a leader in all markets in which it competes. GE is organized into four segments: technology infrastructure, energy infrastructure, home and business services, and capital services. By shedding its underperforming businesses and reducing its risks in GE Capital, GE is now focusing on the energy and power infrastructure market, which should support continued growth for GE.

Latest Developments

On Dec. 26, 2012, as reported, GE’s global research has put together a team of researchers who have achieved a milestone in the price reduction of zero emission buses by using new Durathon battery of GE combined with a lithium battery and hydrogen fuel cell. The development will create a new way to manage the energy which buses consume and it could enrich their fuel acceptance and electrification, along with that of delivery trucks as well as other heavy-duty vehicles, making possible use of cleaner vehicle technology.

Read MORE.