General Electric Co. (NYSE: GE) is demonstrating in its earnings report just exactly why it has been able to keep raising its dividend throughout the last year. The company reported first quarter earnings for 2012 of $0.34, a gain of 3% or a gain of 17% outside of items. Revenue would have been up 4% excluding the impact of NBCU. Thomson Reuters had estimates of $0.33 EPS and $34.7 billion.
GE also saw that leading indicators remain positive. The big focus is going to remain around GE Capital. This unit earned $1.8 billion, about flat on the surface to a year ago, but up about 27% excluding the first quarter of 2011 Garanti sale impact. GE noted that Real Estate has returned to profitability and its GECC Tier 1 Common Ratio is 10.4%. Here is what will help investors focus on the past promises being delivered upon… GE is “on track to deliver double-digit earnings growth in Industrial segments and GE Capital for 2012.”
More solid comments are out on GE Capital. The company believes that GE Capital’s strong business performance should continue for the year and it also said that margins on new business continue to be attractive with overall portfolio margins increasing. It further noted that GECC’s Tier One common ratio of 10.4% has never been stronger.
Dividends may continue to go up, internally and for shareholders. Jeff Immelt said, “We expect to return excess cash from GE Capital over the course of 2012, subject to review by the Federal Reserve. Capital allocation will be balanced and investor friendly.”
Here is the breakdown of the strengths:
- Industrial Segment revenues grew 14% to $23.7 billion;
- Organic Growth was called at +11%;
- Infrastructure orders rose 20% to $23.1 billion with equipment up 29% and services up 11%;
- Industrial Segment profit rose by 10%;
- Industrial CFOA rose by 22% to $2.1 billion.
GE shares closed at $19.14 on Thursday and shares have traded in a range of $14.02 to $21.00 over the last 52-week period. The dividend yield is currently almost 3.6%. The only issue we would really bring up is that much of the good news had already been telegraphed and investors already have much of the news baked into the share price. That being said, Thomson Reuters has a consensus price target objective of $22.29 for this key conglomerate stock.
JON C. OGG