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General Electric’s earnings rise 4 percent

Diversified conglomerate General Electric Co. Friday said second-quarter earnings rose 4 percent, helped by solid growth at its finance, health care and industrial units.
/ Source: Reuters

Diversified conglomerate General Electric Co. Friday said second-quarter earnings rose 4 percent, helped by solid growth at its finance, health care and industrial units.

Citing a rise in orders, the company also said it was on track to meet its target for full-year profit from continuing operations.

GE, whose operations range from jet engines to commercial lending, reported net income of $4.85 billion, or 47 cents per share, compared with $4.65 billion, or 44 cents, a year earlier. Earnings from continuing operations rose 11 percent.

Analysts had expected earnings of 47 cents per share, according to Reuters Estimates. Net revenue was up 9 percent, to $39.9 billion. Wall Street had forecast $39.41 billion.

“Revenue was very strong, slightly above expectations, and earnings were right in line with expectations, which should be no surprise,” said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, who does not own GE shares but follows the stock closely.

“This is not a period where GE wants to deliver anything above expectations,” he added. “There is a bit of economic uncertainty in the second half, so if they can keep some powder dry for the second half, I think they would prefer to do that.”

Jeff Immelt, the Fairfield, Connecticut-based company’s chairman and chief executive, said in a statement the company’s orders were up 17 percent in the quarter.

The company expects its profit from continuing operations to be $1.94 to $2.02 per share, up 13 percent to 17 percent. Wall Street analysts expect full-year profits of $1.99 per share, according to Reuters Estimates.

“They’re just trying to be careful about managing expectations,” said Peter Smith, analyst with Morningstar in Chicago. “I suppose you could interpret that as reflecting some uncertainty with regard to general economic strength, but at the same time that’s still a pretty strong performance if they can get within that range.”

In the second quarter, five of the company’s six divisions posted double-digit percentage increases in profits, with commercial finance leading the pack with a 21 percent profit increase.

Profits at NBC Universal slipped 10 percent.

(MSNBC is a Microsoft-NBC joint venture.)

Rising energy costs and interest rates have raised concerns about a potential slowdown in the U.S. economy.

Although analysts have said the diversity of its operations could allow GE to weather a difficult environment, the company’s stock has underperformed broad market averages of late.

At Thursday’s close, the shares were off 6.8 percent for the year, compared with a 1.2 percent rise in the blue-chip Dow Jones industrial average, which includes GE.

“This is a stock that has lagged because investors have gone to more pure plays in their respective markets,” said Michael Church, financial analyst and portfolio manager at Church Capital Management, in Yardley, Pennsylvania. “But risks seem to be mounting. And in the current trading environment, this is a stock that will play catch-up.”

GE is the world’s second largest publicly traded company by market capitalization, behind Exxon Mobil Corp.