GE's Q2 earnings jump 21%

Gaining momentum

General Electric’s second-quarter earnings jumped 21%, topping estimates, boosted by strong overseas demand for its heavy equipment including jet engines and electric turbines. The largest U.S. conglomerate said second-quarter profit came to $3.69 billion, or $0.35 per share, compared with $3.03 billion, or $0.28 per share, a year earlier. Excluding onetime items, profit was $0.34 per share, topping the $0.32 consensus estimate. Revenue fell 3.5% to $35.63 billion, from a prior year $37.44 billion, reflecting the sale of a majority stake in its NBC Universal business to Comcast (CMCSA).

The strongest growth came in the company's railroad locomotive unit, which posted a 74% surge in revenue following an extended downturn. The company’s energy unit stood out as a weak spot, with a 19% drop in profit, reflecting pressure in the renewable-energy sector as well as its ongoing integration of recent acquisitions. The company’s total backlog, a measure of future industrial growth, rose 6.8% to a record $189 billion. GE joins a slew of big U.S. manufacturers reporting second-quarter results this week. Their results have been mixed as companies that do a lot of business outside the U.S. have exceeded Wall Street's expectations while those with significant exposure to U.S. consumers have fallen short.

GE also sounded an upbeat note for the second half of the year, noting that its infrastructure orders were up 24% overall in the second quarter, compared to the year-ago period. GE has seen its core earnings improve in recent quarters, helped in part by strong emerging market infrastructure demand and restructuring efforts. Credit Suisse believes GE’s results for the quarter are solid, and remains bullish on the stock as it expects a better second half ahead for the company’s energy unit. The brokerage said strong orders and rising investment also bode well for GE’s earnings in the longer term.

General Electric (GE : NYSE : US$19.04), Net Change: -0.12, % Change: -0.63%, Volume: 81,255,219

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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