Despite Current Market, No Real Slowdown Out Of General Electric (GE)

Industrials

Published: January 18, 2008 6:51 am

General Electric (NYSE: GE) has just posted earnings with EPS up 17% to $0.68, in-line with $0.68 First call estimates. Revenues were up 18% with organic revenue growth of 10% to $48.6 Billion, above the $47.25 Billion estimates.

Total orders in the fourth quarter were $27 billion, up 18%; major equipment orders of $14.1 billion, up 33%; services orders of $9.7 billion, up 5%

GE’s full-year 2007 EPS was $2.20, up 18% on earnings of $22.5 billion; and fiscal year revenues of $173 billion, up 14%; organic revenue growth of 9%.

GE is also reaffirming total year 2008 guidance with EPS baseline at $2.42+ up 10%+ and compared to consensus of $2.43. Based on the trailing 12-months GE now has a P/E ratio of roughly 15.1 and based on its guidance its forward P/E ratio for 2008 of roughly 13.7.

CEO Jeff Immelt has noted that more than 50% of orders now come from outside the U.S.. Infrastructure showed 26% profit growth, and 20% or higher growth in aviation, energy, oil & gas, transportation, and water. Even its NBC Universal unit showed 10% earnings growth. Healthcare was down about 4% but it exp[ects a better 2008 in that segemnt.

GE’s full-year consolidated effective tax rate was 16%, which was slightly below the company’s full-year 2007 expectations of 17% due to the higher proportion of lower taxed, global earnings in financial services. The full-year industrial effective tax rate was 22%, in line with the company’s expectations.

Immelt also said, "We want investors to see GE as a reliable growth company even in tough times. We will sustain our growth in 2008 led by Infrastructure and focus on hitting our financial goals of at least 10% EPS growth, 20% ROTC and organic revenue growth of 2-3 times GDP…. Our portfolio is strong, our initiatives are delivering and we are positioned to win in the mega themes of this era."

GE shares were spanked hard yesterday in a brutal market with shares closing down $1.35 at $33.21, which is almost a 52-week low. With about 3 hours to the open it appears that shares are indicated slightly higher, although this far ahead is hard to tell a real price.

Jon C. Ogg
January 18, 2008

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