Diversified industrial giant General Electric (GE - Free Analyst Report) has reported mixed results for the third quarter. Revenues, at $35.9 billion, slipped 5% from the prior-year period and came in well below our forecast of $41.2 billion. Equipment sales continue to disappoint, with weaker-than-expected demand at the Energy Infrastructure and Aviation units largely to blame. Further, although performance at the GE Capital finance division has gradually improved, reduced assets under management remain a drag on results.

Despite the challenges, though, GE's share-net tally of $0.29 topped our $0.27 estimate. Indeed, excluding its NBC Universal entertainment unit, which was recently sold to cable heavyweight Comcast (CMCSK), the operating margin expanded by 40 basis points, to 16.4%, as the company did an admirable job of cutting expenses where needed.

Taking a long-term view, we like some of GE's recent balance sheet maneuvers. Specifically, the company has reduced its debt load by more than $20 billion (about 6% of the total) since the end of 2009. Too, far from retreating, General Electric has made a few strategic acquisitions this year, including energy consultant Dresser and select finance portfolios from Citigroup (C).

Though the conglomerate may suffer some bumps and bruises over the near term, we think GE is well positioned for the long haul. In fact, we expect share earnings to grow at a double-digit clip on an annual basis out to 2013-2015. Consequently, General Electric stock holds wide appreciation potential over that time frame, and the decent dividend yield only sweetens the pot.

About The Company: Founded in 1892, General Electric Company has grown into one of the largest & most diversified industrial companies in the world. Its variety of segments include Energy Infrastructure (24% of ’09 revenues); Technology Infrastructure (27%); NBC Universal (10%); Consumer & Industrial (6%); Capital Finance (33%). On a geographic scale, more than half of General Electric’s revenues came from overseas last year.


At the time of this article’s writing, the author did not have positions in any of the companies mentioned.