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GE Industrial Profit Will Grow by 10%: Oppenheimer

Tickers in this article: GE SPX.X ^DJI

NEW YORK (TheStreet) -- General Electric has seen its stock lag the market a bit this year, but the company is on track to see profit from its industrial units grow by 10% in 2014, according to Oppenheimer analyst Christopher Glynn.

GE's shares closed at $22.90 Friday, returning 10% year-to-date, which trailed the stellar 15% returns for the Dow Jones Industrial Average and the S&P 500 Index .

The shares trade for 12.6 times the consensus 2014 earnings estimate of $1.82, among analysts polled by Thomson Reuters.

GE reported first-quarter operating earnings of $4.059 billion, or 39 cents a share, compared to $4.666 billion, or 44 cents a share, in the fourth quarter, and $3.567 billion, or 34 cents a share, during the first quarter of 2012.

While the bottom-line results came in ahead of the consensus estimate of 35 cents, investors were initially less than thrilled as the company's industrial revenue was down 6% year-over-year, to $22.7 billion. Please see TheStreet's earnings coverage for a full review of General Electric's first-quarter results.

The industrial segment seeing the biggest decline was Power & Water, with first-quarter revenue down 16% from a year earlier, to $22.7 billion. CEO Jeff Immelt said in the company's earnings release on April 19 that "Power & Water markets were worse than we expected. While we anticipated significantly fewer wind and gas turbine shipments, we saw additional pressure in European Power & Water services. This weakness also had a negative impact on margins."

GE is aiming to improve its profit margin for its industrial segments by 70 basis points by the end of the year.

In a note to clients on Sunday, Glynn wrote that "we continue to view some of the disruptive complexion of 1Q trends as largely reconcilable with the full-year plan," although his revenue and earnings model for GE factors in a margin improvement of just 50 basis points.

Glynn estimates that GE Capital will have flat year-over-year revenue in 2014, with profit for the financial arm increasing by 5%. General Electric continues to deemphasize GE Capital as part of Immelt's long-term strategy to focus on growing the conglomerate's industrial segments and lowering its reliance on short-term funding.