GENERAL ELECTRIC CO. $21 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $222.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines; aircraft engines; health care equipment; home appliances and lighting; and locomotives.
To cut the risk of further losses following the 2008 / 2009 financial crisis, the company continues to scale back its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 31% of GE’s overall revenue and 45% of its earnings.
In the three months ended September 30, 2012, GE’s revenue rose 2.8%, to $36.3 billion from $35.4 billion a year earlier. Revenue from the industrial businesses rose 7.4%, partly because GE bought companies that supply equipment to oil and gas producers. That offset lower sales of wind-power gear. The company continues to shrink GE Capital. As a result, this division’s revenue fell 5.4%. Earnings rose 9.9%, to $3.8 billion from $3.5 billion. Because of fewer shares outstanding, earnings per share rose 12.5%, to $0.36 from $0.32.
GE’s industrial businesses now have an order backlog of $203 billion. That’s up 6.3% from $191 billion a year earlier.
The company’s strong balance sheet will let it keep expanding its industrial operations. In all, these businesses hold cash of $8.4 billion, or $0.80 a share. Their debt is $12.1 billion, or a low 5% of GE’s market cap.
The company should earn $1.55 a share in 2012. The stock trades at 14.2 times that estimate. The $0.68 dividend yields 3.1%.
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