General Electric Company (GE) released its second quarter 2011 earnings results before the opening bell today, reporting earnings per share from continuing operation of 34 cents. This was above the Zacks Consensus Estimate of 32 cents and up 17% year over year.
This was the fifth consecutive quarter in which the company witnessed double-digit growth in earnings. Profits were primarily driven by strong demand internationally for heavy equipment including jet engines and electric turbines.
Revenue
Total revenue for the quarter declined 4% year-over-year to $35.6 billion, primarily due to the sale of a majority stake in its NBC Universal business to Comcast Corp. (CMCSA). However, excluding this impact revenue grew 7% year over year. Revenues were above the Zacks Consensus Estimate of $34.6 million.
Total orders in the quarter increased by 24% year over year, with the total backlog reaching a record level of $189 billion. Orders for equipments increased a robust 33% and services orders were up 16%.
Segment Details
GE Capital Services revenues decreased 1% from the prior-year to $12.4 billion, while Industrial sales contracted 6% year over year to $23.0 billion.
Margins
Margins during the quarter declined due to the pressure in the renewable sector. In addition, margins were also impacted by the integration of Energy acquisitions.
During the second quarter, the company increased its R&D investment 40% compared to the prior year in order to drive strong organic revenue growth and future margin expansion.
Balance Sheet
At the end of the quarter, GE had cash worth $91 billion. Year-to-date, the company has executed $1 billion of stock buybacks and $2.7 billion of stock buybacks.
Year to date, cash generated from Industrial operating activities totaled $4.4 billion.
General Electric currently holds a Zacks #3 Rank, which implies short term Hold recommendation.
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