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General Electric Beats on EPS but GAAP Results Lag

General Electric (NYSE: GE  ) reported earnings on July 30. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), General Electric met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew slightly and GAAP earnings per share contracted significantly.

Margins dropped across the board.

Revenue details
General Electric booked revenue of $36.50 billion. The nine analysts polled by S&P Capital IQ expected to see net sales of $36.80 billion on the same basis. GAAP reported sales were 2.5% higher than the prior-year quarter's $35.62 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.38. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.37 per share. GAAP EPS of $0.29 for Q2 were 17% lower than the prior-year quarter's $0.35 per share. (The prior-year quarter included $0.02 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 35.4%, 130 basis points worse than the prior-year quarter. Operating margin was 12.1%, 110 basis points worse than the prior-year quarter. Net margin was 8.5%, 210 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $36.71 billion. On the bottom line, the average EPS estimate is $0.37.

Next year's average estimate for revenue is $148.64 billion. The average EPS estimate is $1.54.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 15,438 members out of 16,481 rating the stock outperform, and 1,043 members rating it underperform. Among 3,095 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 2,918 give General Electric a green thumbs-up, and 177 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on General Electric is outperform, with an average price target of $22.32.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On August 02, 2012, at 5:51 PM, Camacam wrote:

    Would somebody please take a moment to explain why the GAAP earnings fell when reported earnings rose?

    It seems like if you report enough numbers you can always find some that will make a bullish case.

    Which Generally Accepted Accounting Principles did GE not conform to so that up earnings could be reported. Thanks.

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