General Electric Co. (NYSE: GE) will report earnings Friday morning, and analysts are projecting earnings per share of $0.53 on revenue of $40.2 billion.
The $0.53 EPS estimate is a 20% increase from General Electric's 2012 Q4 earnings. Likewise, the revenue estimate is 2% higher than the $39.3 billion revenue GE reported in the previous year.General Electric Co NYSE: GE Jan 16 loading chart... Price: 27.20 | Ch: -0.14 (-0.5%)
However, the biggest takeaway from GE's earnings report will be the diversification of its revenue streams.
General Electric has made some strategic changes lately, chief of which was taking the focus off of the GE Capital division. Moving away from the media business and getting back to its roots in the industrial sector was another major change.
In Q3, General Electric reported that less than 30% of its revenue was generated by its GE Capital division. Before the financial crisis of 2008, the GE Capital had accounted for more than 40% of GE's revenue.
General Electric is now focusing heavily on the aerospace industry and has been developing engines for The Boeing Co.'s (NYSE: BA) 777X jetliner. GE made headlines in November when it received $26 billion in orders for the engine from three Middle Eastern countries.
Similarly, General Electric has increased its efforts in the energy industry - particularly wind and subsea energy. Any success General Electric sees in the energy industry will be clearly reflected in the conglomerate's revenue.
Shareholders have been pleased with GE's direction, and GE stock has climbed 28.6% since last January. More recently, GE stock has gained 11.5% in the last three months.Owning General Electric (NYSE: GE) Stock After Earnings
There's the risk that if General Electric misses earnings Friday, GE stock may dip on the short term. But according to Money Morning's Event Trading Specialist Shah Gilani, GE stock is still a strong foundational stock for many investors, for these reasons:
"Own a diversified industrial conglomerate that pays a good dividend; maybe General Electric is a good start," Gilani told Money Morning readers Wednesday. "This position plays on the industrial base of machinery, goods, and services that are all necessary for an increasingly industrialized world."
Because General Electric operates in numerous industries, it is often considered a bellwether for the broader markets. GE continues to strengthen that notion by moving away from GE Capital and into industrials.
Don't be overly concerned with the short-term performance of GE stock following earnings. If GE continues to show growth in the aerospace and energy industries, it will remain a strong play moving forward.
General Electric (GE) stock closed down 0.51% Thursday at $27.20.
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