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

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

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!