Prospects for the financial performance of General Electric Company (GE) seem brighter than ever, as multiple sectors have been reporting growth in revenue and profit. Market analysts have given the company a very positive rating based on the growth shown by the company in the most recent release of its financial information. The company's strength is not isolated to a single area, but is being emanated from all the areas; for instance, there is growth in the revenue of the company, growth in earnings per share, plausible performance of stock with commendable valuation levels, and an increase in the net income of the company.
All these trends point toward an even better performance of the company in the prospective periods. The company disclosed a profit rise of 8.3% in its third quarter. This rise in profit can be directly attributed to the rise in demand for railroad locomotives and electric turbines in Asia and U.S. This increase in demand helped the company deal with the weaknesses exhibited by its business in Europe.
GE Transportation, which is one of General Electric's major operations, reported strong results for third quarter as well. As mentioned earlier, the company's profit is driven by the rise in demand for locomotives, and this is the operation that addresses the demand for locomotives. The major reason behind the rise in demand is the increased growth in infrastructure in the markets in which the company conducts its operations. The revenue of GE Transportation was reported to be $1.4 billion in the third quarter and the growth in overall revenue was 9% compared to last year's third quarter. The profit was reported to be $265 million which rose 35% compared to third quarter in 2011. The company received an increased number of orders from international customers causing a sudden surge in the revenue and profit of the company.
On the other hand, the overall profit of General Electric increased to $3.49 billion from last year's $3.22 billion. The overall revenue of the company increased by 2.8% to $36.35 billion from last year's $35.36 billion. The trends exhibited by both the profit and revenue of the company are great news for the shareholders of the company and the prospective investors. The market performance of the company is expected to be even better since the company has shown a stable upward trend in profitability. The officials at the company are optimistic about the future of the company as well. Jeff Immelt, CEO of the company, said:
The global economy is uncertain, and we are prepared for a variety of economic outcomes.
General Electric has also shown a greater growth than the industry average. This gives the company an edge over its competitors and other constituents of the industry. The main counterparts are, Citigroup Inc. (C), Koninklijke Philips Electronics NV (PHG), Siemens AG (SI), and Caterpillar Inc. (CAT). Despite the high competitiveness of the industry, the well-diversified operations of the company have given it the competitive advantage. General Electric is seeking an increased diversity in its operations and this objective of the company can be witnessed through some of the recent investments it has made. One of the sectors in which it is taking keen interest is pharmaceuticals. The company seems to be developing a personalized medicines space.
While the company is showing great financial performance, the international business expansion of General Electric to enhance diversity in operations continues. The interest of the company in pharmaceuticals can be evidenced by its investment in such a company in Asia. Recently, General Electric acquired an 8% stake in an India-based company Syngene for $23 million. This company is a formulation development and chemistry services firm. Such business expansions will surely enhance the accessibility of the company to international markets and it will improve its process of global expansion even further.
After the analysis of the financial performance of different sectors of the company and the recent developments in the company's business expansion, it can be said that all aspects of General Electric are moving in the right direction. The company has shown a significant growth in its revenue and its profit, which can be attributed to the rise in demand in the markets where the company has its operations. Some of the sectors of the firm performed really well, while others had their weaknesses. However, the extremely good performance of the strong sectors offset the performance of the weak sectors. Therefore, the overall result was very strong.
In my opinion, the investors should buy the company's stock, as the prospects look very promising. The profitability trends of the company are moving upwards, and there is no reason to believe that these trends will fall back anytime soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.