Industrials

General Electric Earnings Do Not Electrify Investors

Paul Ausick

Published: January 22, 2016 7:50 am

Last Updated: January 13, 2020 2:44 pm

General Electric Co. (NYSE: GE) reported fourth-quarter and full-year 2015 results before markets opened Friday. The conglomerate reported quarterly diluted net earnings per share (EPS) of $0.64 on revenues of $33.9 billion. In the same period a year ago, GE reported EPS of $0.56 on revenues of $42.0 billion. Fourth-quarter results also compare to the consensus estimates for EPS of $0.49 on revenues of $35.96 billion.

For the full year, GE reported a GAAP net loss of $0.61 per diluted share on revenues of $117.4 billion, compared with 2014 EPS of $1.65 on revenues $148.59 billion. Non-GAAP operating earnings per share totaled $0.35 for the year, down 68% from $1.08 in 2014.

Revenues in the oil and gas segment were down 16% year over year in the quarter from $5.16 billion to $4.36 billion. That drop was partially offset by a 3% increase in power segment revenues. Overall, industrial segment revenues were up 1% at $33.89 billion, compared with $33.41 billion in the year-ago quarter. Totals include $46 million in corporate items and eliminations for the fourth quarter of 2015 and $1.28 billion for the year-ago quarter.

The company also reported sales on the basis of its industrial businesses and its “verticals” — that is, the businesses GE expects to retain as it shaves off parts of GE Capital. These are GECAS, EFS, Healthcare Equipment Finance, Working Capital Solutions and run-off Insurance. The reasoning is that this pro-forma figure gives shareholders a better idea of what the company will look like going forward. In the fourth quarter, the revenue from the industrials and verticals, excluding special items of $46 million, totaled $33.84 billion, up 1% compared with the fourth quarter of 2014 when the total was $33.45 billion.

GE also noted that its backlog during the quarter rose 18% year over year to $315 billion. Of that total, $226 billion is services backlog and $89 billion is equipment.

CEO Jeff Immelt said:

GE executed well in a slow-growth environment. For 2015, we accomplished all of the goals we outlined for investors. We recognize that the first few weeks of 2016 have been especially volatile. However, our orders in the fourth quarter grew 1% organically and our backlog grew to $315 billion with Alstom. We believe in the strength of our business model and that there is enough growth out there to deliver in 2016.

Analysts have estimated first-quarter EPS of $0.27 on revenues of $29.7 billion. For the 2016 fiscal year, the current consensus calls for EPS of $1.51 on revenues of $130.46 billion.

As a reminder, Citigroup told clients just a day ahead of earnings that it was time to buy GE and two other top conglomerates for serious upside (over 30%) ahead. GE shares traded down about 1.4% in Friday’s premarket session, at $28.20 in a 52-week range of $19.37 to $31.49. Thomson Reuters had a consensus analyst price target of $32.43 before the results were announced.