For the first quarter of 2014, General Electric reported strong sales growth that was bolstered in large part by its industrial businesses. Organic revenue, in fact, increased 8% for the quarter across the industrial units, beating GE's own expectations of 4%-7% during the first three months of the fiscal year. Earnings per share, meanwhile, declined 15% including one-time events from 2013, but reflected an increase of 9% when excluding those events.

From a broader perspective, the quarter provided reassurance for GE investors about the year ahead, with management describing the economic environment as "generally positive" and the typically lackluster European market as "better than expected." As the momentum builds in a positive direction, here are three key takeaways for investors to digest from the conglomerate's most recent quarter:

Source: Flickr/JeffreyTurner.

1. GE is on firmer footing in 2014
At this point in 2013, GE's first quarter was tainted by a 17% decline in European orders, leading The Wall Street Journal to remark that the continent across the pond had "sapped its industrial businesses." Expectations for the year were ratcheted down and management was highly concerned about the tumultuous economic environment.

Fast-forward 12 months, however, and those days of severe uncertainty are but a distant memory. GE posted steady growth in its core industrial businesses, offset slightly by the planned downsizing of GE Capital. Overall, revenues were $34.2 billion, or 2% shy of the year-ago period.

On the bottom line, GE is generating healthy earnings and cash flow. Operating earnings amounted to $3.3 billion for the quarter while cash generation totaled $1.7 billion, including $500 million in a cash dividend from GE Capital.

Relative to last year's shaky start, GE appears to be performing in a manner that aligns with the goals set in its 2014 operating framework. While the first quarter is often the slowest for manufacturing companies, GE managed to boost industrial segment profits by 12%, keep infrastructure orders on par, and increase profitability by 50 basis points versus the prior year. Early readings of the company's performance indicate GE's in a much better position this go-round.

2. Industrial revenue and profits are expanding in lockstep.
As GE looks to spinoff a sizable portion of its financing arm, GE Capital, all eyes are on the industrial businesses that will be critical to fuel future earnings growth. So far in 2014, signs point to a well-tuned engine in the core areas of the business, despite the lumpiness of the individual segments. Here's an illustration of the sales growth across GE's seven industrial units during the latest quarter:

As you can see, these specific operations -- at least on an individual basis -- move at their own speed, and that goes for their earnings performance as well. Nevertheless, one of the benefits of running a conglomerate is that the sum of several distinct parts can lead to moderated but positive growth for the whole. This is truly the case for GE due to the ebbs and flows of business cycles, seasonality, and investment timing. In the first quarter of 2014, revenue for all segments combined ticked up by 8% and segment profits followed in lockstep with a 12% overall increase.

3. GE Capital's humming along ahead of partial spin-off
Summer is right around the corner, and with the new season comes the highly anticipated IPO spinoff of GE Capital's North American retail finance unit. Before GE parts ways with what will be known as Synchrony Financial, however, the company is polishing off its balance sheet to inspire confidence in potential investors.

One measure of banking resiliency that's become widely cited by analysts and pundits since the financial crisis is the Tier 1 common ratio, which provides a gauge of a lender's capital adequacy. In this regard, GE Capital appears increasingly well fortified. During the first quarter, GE Capital posted a Tier 1 common ratio of 11.4%, up 32 basis points and nearly double the required 6% benchmark for a firm to be considered "well-capitalized."

On its own, GE Capital's revenue declined 8% while profits were flat for the quarter. Four out of its five financial segments posted profit growth, however, as GE is positioning its banking arm to grow at a pace on par with the industrial business after the spin-off.

Where's the upside from here?
Despite last year's rough start, management retooled their game plan and 2013 proved to be a prosperous year for both the company and investors. During that time frame, GE's stock price increased by 24% from mid-April through the end of the year.

A year later, GE has a lot more wind in its sails, but the expectations from the market look reasonable going forward. GE still trades at a discount to its peers at 18 times trailing earnings relative to the industry average of 21 times earnings. And until the financial spinoff is complete, that discount is likely to persist.

The market, on the whole, seems keen on waiting to see how the spinoff shakes out, but GE's industrial businesses keep picking up momentum. If you expect that to continue, there's no reason to sit on the sidelines with this stock.

Former GE headquarters building. Source: Wikipedia/UpstateNYer.

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