General Electric Earnings: What to Expect Friday

General Electric (GE 1.09%) will release its quarterly report on Friday, and recently, the stock has soared to its best levels since early 2008 as the conglomerate's return to its industrial roots has paid off with solid growth. Yet even as GE rides on the coattails of Boeing (BA 4.73%) in its aerospace division, General Electric earnings will increasingly rely on its ability to compete against both alternative-energy rival Siemens (SI +0.66%) as well as traditional energy-services company Cameron International (CAM +0.00%), as GE aims to become a key player in all things related to the energy sector.

General Electric has come a long way since the financial crisis, with the conglomerate having deemphasized the importance of its GE Capital division. But GE has also made some other big strategic moves, choosing to divest its stake in NBC Universal and exit the media business in favor of going back to its historical presence in the industrial sector. Still, tough conditions in the economy have held back GE's revenue even as profits have jumped substantially. Let's take an early look at what's been happening with General Electric over the past quarter and what we're likely to see in its report.

Source: Flickr/Jeffrey Turner.

Stats on General Electric

Source: Yahoo! Finance.

What's next for General Electric earnings?
In recent months, analysts have gotten less optimistic about General Electric earnings, cutting a penny per share from their fourth-quarter estimates and reducing full-year 2014 projections by 5%. The stock has kept moving higher, rising 13% since mid-October.

General Electric's third-quarter results showed just how far the conglomerate has come in transforming itself. The GE Capital division still makes up a substantial part of the company's overall revenue and profits, but with the division's contribution to sales falling below 30% during the quarter, GE has made a lot of progress from the more than 40% levels that prevailed in the run-up to the financial crisis, divesting key financial assets to reduce the division's importance to the company. Instead, massive acquisitions in the aerospace and energy areas have helped those divisions become much more profitable.

In particular, General Electric has done a good job of standing up to Siemens in the wind-turbine market. During the third quarter, GE shipped more than 400 wind turbines, and even though that's down substantially from 2012, General Electric has still found lucrative projects for future wind development, as well as coming up with technological innovations to boost output on existing installations.

The big question, though, is what GE will come up with next. CEO Jeff Immelt expects to look inward during 2014, finding ways not just to restructure its existing business but also look for profitable ways to change the corporate culture. General Electric hopes that a more efficient operational structure will lead to lower costs, boosting profits and making the most of what has been a big challenge in finding ways to increase revenue.

Another area that General Electric expects to focus on in subsea energy production. Cameron International recently entered a partnership with Schlumberger (SLB +0.67%) to join forces and fight GE in the lucrative segment, and the increasing importance of ultra-deepwater drilling and some massive oilfield finds in hard-to-reach places should provide plenty of growth for both General Electric and its competitors. At the same time, GE is also building expertise in liquefied natural gas, with many countries looking to export natural-gas production through LNG terminals that General Electric could use its expertise to help build.

In the General Electric earnings report, watch closely to see how the company's revenue and profit mix compare with past quarters. As long as Boeing's success keeps GE's aviation segment busy and a solid energy industry bolsters the company's various energy-related segments, General Electric has the capacity to keep climbing from here.

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