Wait To Buy GE At This Price

General Electric (GE) operates as a technology and financial services company worldwide. The company has a market cap of $224 billion, and its stock price is around $21. GE reported third quarter earnings on October 19th. The company reported revenues of $36.35 billion which was a 3% increase from revenues of $35.3 billion in the third quarter of 2011. Analysts had predicted revenues of $36.95 billion. Net income was $3.49 billion. The company had earnings per share of $0.33 which was a 49% increase from earnings per share of $0.22 in the third quarter of 2011.

Positive news came from GE’s industrial unit which grew revenues at a rate of 6%. GE’s industrial unit is made up of five segments: aviation, healthcare, transportation, energy, infrastructure, and oil & gas. During the third quarter earnings call, GE’s CEO Jeffrey Immelt said “Every industrial business had positive earnings growth for the first time since the third quarter of ’05.”

The two brightest spots for the company were in GE’s aviation and its energy infrastructure divisions. The aviation unit had a profit of $924 million which was a 7% increase from the third quarter of 2011. This unit whose primary source of revenues comes from the sale of jet engines has seen a 150 basis point increase in operating margins and depending on the engine type it has a two to seven year order backlog. The company’s energy infrastructure unit increased earnings by 13%. This division has taken advantage of increased drilling for oil and natural gas. Both offshore drilling and onshore drilling in shale formations have increased dramatically. To continue reading, click here.