General Electric: Above And Beyond Competitors

General Electric Company (NYSE:GE) is a highly diversified technology and financial services corporation, with its offerings ranging from aircraft engines, water processing, power generation, and household appliances to medical imaging, business and consumer financing and industrial products.

General Electric Company (NYSE:GE) increased by about 22% in 2012. It  outperformed the S&P 500 (INDEXSP:.INX) with strong performance of its stock in the month of September. NBC Universal exited the long-running conglomerate’s portfolio of businesses, but GE still expanded its business interests, which includes energy infrastructure, aviation, healthcare, and finance. Like many other conglomerates, GE is also betting big on emerging markets. GE expects growth from the rapid-growing economies of Asia-Pacific and Latin America, along with the boosted  industrialization of resource-rich middle-east, North Africa, and Russia.

Encouraging Financials

General Electric posted higher fourth quarter 2012 operating earnings of $4.67 billion, compared to $4.14 billion or $0.39 per share in the previous year of 2011. The net earnings attributable to GE common shareowners increased to $4.01 billion, or $0.38 per share, as against last year’s $3.73 billion, or $0.35 per share. The GAAP earnings from continuing operations were recorded at $4.3 billion, or $0.41 per share.

Quarterly revenues and other income came in at $39.33 billion, a 4% growth from $37.97 billion a year earlier, with industrial segment organic revenue growth of 4% for the quarter.

Competitors

The nearest competitors of General Electric Company (NYSE:GE) are Siemens AG (NYSE:SI), DuPont, Honeywell International Inc. (NYSE:HON) and Danaher Corporation (NYSE:DHR). The General Electric is a huge company compared to any of these with a market capitalization of $222 billion. The market capitalization of Siemens is $95.1billion; DuPont has $43.1 billion worth of market capitalization.

General Electric has broadened its competitive scope in the global market. The company has done this through its diversified operations and product innovation. Some promising progress has been made by the company in terms of revenue growth and has also expanded its share in the global market by targeting new profitable opportunities in the emerging market.

The factors, which by and large contributed to the recent success of GE, are a sequence of smart investment decisions, a series of fresh technological innovations and the signing of new profitable contracts. General Electric has recently invented the Serial FPDP, a state-of-the-art high-speed data transfer module, which provides a brilliant total bandwidth of 1.4 Gbps. Both commercial, as well as military applications of this ground-breaking technology are marvelous and should allow the business to enjoy greater revenues and higher cash flows.

Siemens AG (NYSE:SI) has been a close rival of GE. The company has performed exceptionally well over the previous years. It has also given steady returns to the investors. Siemens AG Capital Market Day was organized in London, in which acknowledged financial analysts talked about the company’s impressive performance in the first fiscal quarter of 2012. The future plans of the company were also discussed in detail, most importantly regarding the innovations in the healthcare sector. Siemens looks forward to devise wide ranging plans and strategies to enhance its share in the global market. In the last year alone, Siemens has recorded an impressive income growth of a 67% while sales and revenues have also grown significantly.

2013 update

The company pulled down its outlook for GE capital earning growth in 2013 to a single digit. The outlook of 2013 also comprises of $0.3 billion of restructuring in excess of gains.

The management expects to grow industrial earnings double digit. Management is further expecting double digit growth in Oil & Gas, Energy Management, Transportation and H&BS. Power&Water is assumed to be flat in 2013. Earnings growth for both Aviation and Healthcare is expected to be up single to double digits in 2013.

Mining

This segment was one of the hot topics in 2012, when General Electric Company (NYSE:GE) acquired Industrea and Fairchild. The GE penetrated through subsurface mining equipment segment through this acquisition. The management is seeking to build this business organically. The company is following the strategy of patience with this business segment.

New product launch in 2013

The new products which are to be launched in 2013 are:

• Silent MR- it focuses on patient comfort, near precinct noise level.
• GE9x Engine- this new engine will support wide body aircraft, with fuel efficiency.
• Subsea Trees- High performance, durability and simple product structure.
• Battery Powered Shield Hauler- for mining markets, targets fuel, safety and environmental performance.
• New BOP- sensing technology for early kick detection and capable of cutting off wells at greater depths.
• Bio manufacturing- use in MAb therapies, cell line technology in Bio processing.
• Power conversion- drives operating without transformers, a low cost and compact technology.
• Mision1appliances- Horizontal axis washer & Dryer, stainless and dishwater.

Dividend raise and share repurchase

General Electric Company (NYSE:GE) increased its quarterly dividend by 12% and also raised its share repurchase authorization by $10 billion. The dividend of $0.19 is payable January 25, 2013 to shareowners of record at the close of business on December 24, 2012. The quarterly dividend of the company has been increased for the fifth time in three years.

Margin Expansion

General Electric is planning to launch its new product in the market at a premium price to support margin expansion. The company posted operating margin of 14.8% in 2011. It is anticipated that this margin will rise by 30 basis points in fiscal year 2012. General Electric is further looking forward to, increase by 70 basis point in 2013.

General Electric is also planning to reduce the cost incurred in making products, by utilizing its global sourcing network with a particular emphasis on localization and lower cost structures in India and China. The increased margin expansion will help in increased earnings growth, in 2013.

Conclusion

The company has a good dividend history and dividend yield. The General Electric Company boasts of 3.34% dividend yield and a P/E ratio of 15.6. General Electric is targeting margin expansion, new product and services launch in 2013. The natural gas revolution enhanced global investment in infrastructure and low interest rate in developed countries will assist GE in driving growth in 2013. The company looks forward to invest approximately $65 million in Dayton’s Aerospace Corridor. This new facility will be the centre of the company’s electrical power business

The General Electric Company (NYSE:GE) can become  the favorite stock of investors’ with so many good things happening to the conglomerate.