General Electric Co. (GE, Financial) reported total revenues of $33.1 billion and continuing operations of $3.5 billion during fourth-quarter 2016 on Jan. 20. As the company produced solid performance in 2016, GE improved its outlook for 2017.
Brief summary of earnings report
For full-year 2016, GE reported revenues of $123.7 billion, continuing operations earnings of $9.1 billion and net earnings of $8.2 billion based on U.S. generally accepted accounting principles (GAAP). Even though the company’s earnings remained flat, GE’s revenues increased 5% from full-year 2015.
GE’s acquisition of Alstom SA (XPAR:ALO, Financial) contributed to the parent company’s strong 2016 performance including a 1% increase in industrial segment organic revenues for the year. During the fourth quarter, organic revenues increased 4% from the prior-year quarter. Even though non-GAAP industrial operating and verticals earnings per share decreased 12% from fourth-quarter 2015, full-year 2016 earnings increased 14% from full-year 2015 earnings.
The diversified industrial company operates in various segments including power generation, renewable energy, health care, transportation, airlines and capital. GE announced and completed several acquisitions during the quarter including LM Wind Power for $1.65 billion, a controlling interest in Arcam AB (OSTO:ARCM, Financial) and ServiceMax to improve their industrial operations. The company also announced plans with Baker Hughes Inc. (BHI, Financial) to create a new “full stream digital industrial services company” and sell its Industrial Solutions business.
Company offers good outlook for 2017
GE returned $30.5 billion in cash to its shareholders as the company produced strong 2016 results. For full-year 2016, the company increased its cash flow from operations (CFOA) 83% from full-year 2015.
CEO Jeff Immelt praised the company’s execution of its goals for 2016 as GE continued driving growth across the business while investing in additive manufacturing and digital technology. Immelt expects continued growth in 2017 as GE invests in “Industrial Internet” and promotes customer productivity and performance.
GE has a profitability rank of 6, suggesting good growth potential. The company’s operating margin of 14.94% outperforms 85% of competitors, and GE has above-average net margin and return on equity.
As the company shows good growth potential, Ken Fisher (Trades, Portfolio) added 275,649 shares at an average price of $30.31 per share during fourth-quarter 2016. Based on GuruFocus estimates, Fisher gained about 35% on the stock since 2011. As of Dec. 31, 2016, Fisher has the largest stake in GE with 31,731,490 shares.
Disclosure: No position in the stocks mentioned.
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