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GE Capital Returns $3 Billion to Parent

Written by: Philip van Doorn 07/20/12 - 6:47 AM EDT
Tickers in this article: GE

Healthcare revenues totaled $4.50 billion during the second quarter, growing from $4.30 billion in the first quarter, but flat from a year earlier. Profit for the Healthcare segment came in at $694 million in the second quarter, increasing from $585 million in the first quarter, but declining from $711 million in the second quarter of 2011.

Transportation revenue increased 23% sequentially to $1.57 billion in the second quarter, growing 27% year-over-year. Second-quarter segment profit was $282 million, increasing from $232 million in the first quarter, and $178 million during the second quarter of 2011.

GE Capital

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GE Capital's second-quarter revenue totaled $11.5 billion, increasing slightly from the previous quarter, but declining 8% year-over-year, "driven by planned shrinkage," while the finance subsidiary's second-quarter profit grew to $2.1 billion, from $1.8 billion in the first quarter, and $1.6 billion, during the second quarter of 2011.

Following the $3.0 billion payment to the parent company, GE Capital's Tier 1 common equity ratio was a strong 10.1%.

Jack De Gan, the chief investment officer of Harbor Advisory of Portsmouth, N.H., said on Wednesday that "there may be as much as six billion going upstream from GE Capital to the parent company by the end of the year, which is going to allow the company to increase the shareholder dividend and fund some buybacks," since GE "would love to get the number of shares outstanding back to where it was before the credit crisis."

GE's shares closed at $19.80 Thursday, returning 13% year-to-date, following a 1% return during 2011.

GE ChartGE data by YCharts

The shares trade for 11.5 times the consensus 2013 EPS estimate of $1.73. The consensus 2012 EPS estimate is $1.54.

Based on a 17-cent quarterly payout, the shares have a dividend yield of 3.43%.

Interested in more on General Electric? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.