GE Bulks Up: Fool by Numbers

On Jan. 19, anything-and-everything conglomerate General Electric (NYSE: GE  ) released fourth-quarter earnings for the 2006 fiscal year, a period that ended Dec. 31.

  • Earnings growth looks great -- until you remove the effect of discontinued operations from both reporting periods. On an apples-to-apples basis, earnings per share increased a more modest $0.08 from last year's $0.56 of income per share from continuing operations.
  • The balance sheet and cash flow figures discount the GECS financial services arm, as those huge numbers would overwhelm the results from other operations and make the conglomerate look like a bank. Including GECS, GE had $62 billion of cash on hand, $334 billion in receivables, and $433 billion of borrowed money.
  • For General Electric, discontinued operations are more a way of life than a one-time adjustment. The company is looking for buyers for its plastics segment and exploring acquisition opportunities in other areas like oil and gas, aviation, and health care -- including a just-announced $8.1 billion deal to buy the diagnostics business of Abbott Labs (NYSE: ABT  ) .

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$44,621

$40,282

10.8%

Net Profit

$6,576

$3,163

107.9%

EPS

$0.64

$0.30

113.3%

Diluted Shares

10,326

10,563

(2.2%)

Get back to basics with a look at the income statement.

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

33.7%

31.8%

1.9

Operating Margin

16.9%

17.0%

(0.1)

Net Margin

14.7%

7.9%

6.9

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Management Effectiveness

Q4 2006

Q4 2005

Change*

Return on Average Assets

6.0%

3.0%

3.0

Return on Average Equity

23.5%

11.4%

12.1

*Expressed in percentage points.

See how management puts its financial tools to work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$4,800

$2,500

92.0%

Accounts Rec.

$14,300

$15,100

(5.3%)

Inventory

$11,300

$10,315

9.5%


Liabilities

Q4 2006

Q4 2005

Change

Borrowings

$11,300

$10,200

10.8%

Learn the ways of the balance sheet.

Cash Flow Highlights

FY 2006

FY 2005

Change

Cash From Ops.

$14,780

$13,793

7.2%

Find out why Fools always follow the money.

Related Companies:

  • Walt Disney (NYSE: DIS  )
  • Affymetrix (Nasdaq: AFFX  )
  • Agilent Technologies (NYSE: A  )
  • Caterpillar (NYSE: CAT  )
  • Eastman Chemical (NYSE: EMN  )

Related Foolishness:

Disney is a Motley Fool Stock Advisor pick, and Affymetrix is an official Rule Breaker. Read up on GE's competition with a free 30-day trial to either service, or both.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund was a Disney shareholder but had no other position in any company mentioned. Fool rules are here.


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