General Electric (GE), the world’s biggest maker of power generation equipment and jet engines, is starting to hum on all cylinders. With emerging market economies surging, now is a good time to be an industrial conglomerate, especially one with as many quality products and as much operational efficiency as GE.
After cutting its dividend by more than two-thirds during the financial crisis, the company has pushed it back up by 50 percent over the past year. And it hopes to make further hikes this year.
GE’s focus on energy should serve it well as global demand continues to increase in coming years. The company will benefit from its clean energy offerings, such as wind turbines. It has made $12 billion in acquisitions this year to enhance its energy and technology operations.
GE stock has produced a total return so far this year of 8.8 percent, topping the 7.4 percent return achieved by the Standard & Poor’s 500 Index, so you may want to consider it for your portfolio.
The company’s earnings from continuing operations soared 48 percent in the first quarter from a year ago, to $3.4 billion. Revenues rose 6 percent to $38.4 billion, exceeding analysts’ estimates.
Strength in many units
GE’s order backlog climbed to $177 billion in the first quarter from $175 billion in the fourth quarter. Orders for GE’s large-equipment units, including energy, aviation, and health care, gained 13 percent to $19 billion.
Sales rose 9.2 percent in GE’s energy division from a year earlier, to $9.45 billion, lifted by acquisitions. Aviation profits rose 5 percent to $841 million. The company’s healthcare subsidiary enjoyed a 7 percent profit increase to $531 million. GE is the world’s largest producer of medical imaging equipment and information technology systems.
Nomura analysts raised their share price target for GE to $24 from $23 after the earnings report. GE shares recently traded at $19.75. Of 18 analysts tracked by Thomson/First Call, three rate GE a strong buy, nine a buy and six a hold.
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