General Electric (GE, Financial) reported its 2014 earnings for the fourth quarter and full year on Friday, January 23. The Dow Jones Industrial Average Industrials industry leader beat earnings expectations helping its stock to gain 0.78% on Friday, contributing to a weekly gain for the Dow Jones Industrial Average of 0.94%.
General Electric reported fourth quarter earnings per share of $0.56, $0.01 above analysts’ consensus estimate of $0.55. Revenue for the quarter was $42 billion and operating earnings were $5.6 billion. For the full year earnings per share were $1.65 with full year revenue of $148.6 billion and operating earnings of $16.7 billion.
The Industrials conglomerate showed its greatest segment growth in Power and Water. For the fourth quarter the Power and Water segment increased revenue 22% from the fourth quarter of 2013 contributing to full year revenue growth of 11%. Orders in the segment also posted a strong fourth quarter gain of 13% after adjusting for GE’s Algerian deal.
Oil and Gas posted GE’s second strongest revenue segment growth for 2014 at 10%. Additionally, it also posted GE’s strongest segment profit growth for 2014 at 19%. While lower oil prices did affect the segment in the fourth quarter, for the full year GE showed its ability to generate profit through a tough energy market environment.
Aviation, Healthcare and Transportation also continued to post strong numbers for GE. In the Aviation segment GE won the onboard computing system business for the Boeing 777X, a highlight for the quarter. In the Transportation segment GE took 1,355 orders in 2014 for its Tier 4 locomotive which is expected to continue generating significant revenue for the Transportation business in 2015.
Overall, in 2014 GE’s stock suffered slightly from the volatile effects of the energy market downturn, returning -6.67%. Year to date the stock is down 3.12% with a closing price of $24.48 on Friday, January 23. It has a discounted cash flow value of $26.04. GE management’s outlook for 2015 is positive with growth continuing to remain at rates in 2014. While the company’s stock has fluctuated with the market’s volatility many institutional managers believe its ability to improve margins and capitalize on acquisitions and divestitures is a key strength for the company. Its commitment to management incentives and ability to manage through the downturn in oil prices give the company a competitive advantage. Its stock has institutional ownership of 59% and could potentially be a good long-term buy for investors seeking devalued energy stocks in the current market environment.
