Skip to Content
Market Update

Our GE Thesis Holds Tight

Management's double-digit earnings growth expectations for 2012 are in line with our thinking, given the late-cycle nature of GE's end markets.


 General Electric (GE) delivered third-quarter earnings of $0.22 per share, in line with our expectations. After adjusting for the one-time impact of redeeming the Berkshire preferred shares, earnings grew 11% to $0.31 per share. Internal orders grew 6% in the quarter, supporting a backlog of $191 billion, giving us confidence in the firm's ability to grow in the future. Management expects double-digit earnings growth for 2012, one of the few industrial firms to express such conviction at this stage of the cycle. This is in line with our thinking, given the late-cycle nature of GE's end markets and strength in GE Capital. Our long-term thesis is intact, and we maintain our fair vale estimate of $25 per share.

Weak pricing in the wind business continues to pressure energy margins, despite encouraging growth out of the thermal energy and oil and gas businesses. The company said energy will begin to see earnings growth in the fourth quarter after being a drag on earnings for the first three quarters of the year. While profitability in aviation fared better than our initial expectations, the weakness in health-care profitability and declines in the home and business solutions business offset any additional gains.

Daniel Holland does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.