On Friday morning, we'll get an early taste of the summer earnings season as gargantuan conglomerate General Electric
What analysts say:
-
Buy, sell, or waffle? Eighteen Wall Street analyst houses cover GE today. Fifteen of them want to buy, and the other three are holding. In our Motley Fool CAPS community, some 59,000 members strong, nearly 3,100 players have weighed in with their ratings, making this a three-star stock.
-
Revenue. $42.2 billion would satisfy the cravings of your average analyst, and would represent 5.7% growth from the $39.9 billion sold a year ago.
-
Earnings. Management guidance points to a $0.52-$0.54 range of profits per share, up from $0.47 per share last year. The analysts are sticking to the lower end of that estimate.
What management says:
I'd like to highlight two things CEO Jeff Immelt said in the latest earnings conference call. First, he thinks the company's infrastructure business is "in the very early phase of, I think, a long-term secular time period where we have high visibility, broad technologies, great global positioning, increasing margins in backlog and equipment, and long-term service agreements that can span over the next 10 or 15 years." Immelt calls this "the first inning of a nine-inning game here in Infrastructure. What you saw in [the first] quarter, I think, is going to be very repeatable."
Second, he wants us to think of GE as a "safe and reliable growth company that is going to deliver 10%-12% earnings growth with high visibility, just really based on the strength of the operating model." It's enough to give even a hardened income investor the warm fuzzies, I think.
What management does:
That rock-solid reliability shows in the numbers below. Even when revenue growth turns soft, GE finds a way to deliver earnings growth, one way or another.
|
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
|
|---|---|---|---|---|---|---|
|
Gross |
39.8% |
39.4% |
39.6% |
38.6% |
38.3% |
38.6% |
|
Operating |
16.1% |
16.0% |
16.3% |
15.7% |
15.3% |
15.3% |
|
Net |
11.5% |
11.4% |
11.4% |
11.1% |
13.0% |
12.8% |
|
FCF/Revenue |
16.0% |
10.9% |
9.9% |
6.9% |
8.7% |
9.2% |
|
Growth (Y-O-Y) |
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
|---|---|---|---|---|---|---|
|
Revenue |
9.8% |
11.3% |
14.2% |
19.2% |
10.2% |
9.3% |
|
Earnings |
12.4% |
11.8% |
12.7% |
9.5% |
10.7% |
10.2% |
One Fool says:
General Electric is a very large company with tons of moving parts, which makes the stock an instant diversification play. You want some heavy construction in your portfolio? GE can give you that. How about medical devices? Yeah. Media? Basic materials? Commercial banking? Theme parks? Check, check, checkity-check.
Or you could buy some of Caterpillar
The company also has a longstanding reputation as a breeding ground for excellent management, with other S&P 500 companies often reaching into the upper echelons of GE's executive suites when they want a new CEO, chairman, or president. In other words, this is a solidly run company with tentacles reaching into any sector you care to think of, and management thinks the best is yet to come. Do your homework, then act accordingly.
Dow Chemical, Cedar Fair, and Johnson & Johnson are all Motley Fool Income Investor picks. So why not GE? Take this free, all-access 30-day trial pass, head on over to the newsletter site, and find out for yourself.
Fool contributor Anders Bylund holds no position in any of the companies discussed here -- but does own several of their major competitors. You can check out Anders' holdings if you're curious; he is currently ranked 6,187 out of 31,900 ranked CAPS players. Foolish disclosure is covering the market like a giant kudzu.
