GE Tops Estimates: Sign of Stronger Economy or Cost-Cutting?

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Since General Electric (NYSE:GE) has diversified its business on a massive scale — it is a conglomerate with a major manufacturing footprint in the energy, aviation, finance, and healthcare industries — its financial results often reflect the health of the economy, especially the U.S. economy. As 2013 winded down, several jobs reports showed strengthening employment gains, consumer spending remained resilient, and the manufacturing sector grew briskly, and so Wall Street expected GE to report a strong quarter.

General Electric’s fourth-quarter results did manage to surpass both Wall Street’s top-line and bottom-line expectations; analysts surveyed by FactSet predicted the company’s earnings would jump 20 percent to 53 cents per shares from the 44 cents per share recorded in the year-ago quarter, while revenue would increase 12 percent to $40.27 from the $36.02 billion in sales booked in the fourth-quarter of 2012. Thanks to a strong increase in orders for industrial equipment — with demand for jet engines and electrical turbines growing — earnings rose 16 percent.

Adjust profit from continuing operations rose $5.42 billion, or 52 cents per share, and revenue inched up 3.1 percent to $40.0 billion, with industrial sales accounting for $28.8 billion of that total. In particular, higher sales in emerging markets, greater banking profit, and strong sales of jet engines and drilling equipment contributed to the strong results.

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