General Electric Company (GE) Reports..and Stock Sinks

General Electric Company (NYSE:GE), one of the world’s largest companies by both sales and market cap, and economic bellwether for … well, basically for everything, reported its Q1 earnings on Friday. So should the fact that General Electric Company (NYSE:GE) stock sank 4% on the news worry you?

General Electric CompanyLet’s find out. On Friday, General Electric Company (NYSE:GE) revealed that:

Overall operating earnings increased 15%.

Profits growth was seen in five of the company’s eight business divisions.

Earnings from continuing operations — i.e., backing out both putatively “one-time” restructuring costs and clearly one-time profits from the sale of its stake in NBCUniversal to Comcast Corporation (NASDAQ:CMCSA) — grew an even more impressive 17%.

However, sales were flat against the year-ago quarter, and actual cash generated from operating activities at GE dropped more than 90% year over year, to just $0.2 billion. For this, General Electric Company (NYSE:GE) offered the weak explanation that it spent a lot in Q1 “to inventory build for second-half volume.”

That doesn’t bode particularly well for the future of General Electric Company (NYSE:GE) stock, despite the implied assumption that management hopes to do more business in the second half of the year. It also doesn’t seem to bode particularly well for the Dow Jones Industrial Average regaining its recent highs, either. So what’s behind the assumption that things will perk up in H2?

Well, for one thing, General Electric Company (NYSE:GE) says its equipment orders were up 10%. As orders turn into completed sales over the course of time, that should translate into revenue growth. Oil and gas equipment orders in particular grew 24%, and — kind of flying in the face of Textron Inc. (NYSE:TXT)‘s warning about business jet sales earlier in the week — General Electric Company (NYSE:GE) says orders at its Aviation unit spiked 47% higher. We can probably thank booming airplane sales at Airbus and The Boeing Company (NYSE:BA) for that last one.

All that being said, there remains one substantial headwind to growth in GE stock: Europe.

CEO Jeff Immelt called out the continent by name in his sum-up of the quarter that was, uttering the dreaded “C” word — “challenging” — when describing the business environment in Europe. Industrial segment revenues in Europe dropped a depressing 17%, which seems to have taken management by surprise. Immelt noted that this weakness hurt its profit margins as well as its sales numbers.

Sadly, if GE’s going to turn around in H2, it looks like Europe will have to turn itself around first.

The article General Electric Reports Earnings; GE Stock Tanks originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Electric and Textron.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!