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A General Electric Company (GE) logo is seen on a toggle switch package in New York in this January 18, 2012 file photo. General Electric Co posted a record backlog of orders that the company said positioned it well for 2014, lifting shares and overshadowing a decline in quarterly profit and revenue.Shannon Stapleton/Reuters

General Electric Co. has an order backlog of almost $230-billion (U.S.) and dominant business franchises in most of the countries boasting the world's biggest secular growth stories. So, should investors ignore GE's revenue shortfall announced Friday? Yeah, you really should.

General Electric stock climbed more than 4 per cent Friday after reporting adjusted earnings a penny above expectations at 36 cents. More than earnings, the market was responding to improving profit margins and a $6-billion quarter-over-quarter increase in the company's backlog of orders. Across all divisions, the company's backlog now stands at a record $229-billion.

Emerging markets infrastructure development, medical equipment for an aging developed world population, water supply management, renewable energy – name virtually any global growth trend and General Electric has a leading market position.

In the most recent quarter, the company saw a doubling of orders for renewable power equipment, primarily wind turbines. Aircraft engine orders jumped 400 per cent and sales of health-care equipment to China climbed 33 per cent year over year.

Management continues to restructure in order to de-emphasize the finance division, GE Capital, which exposed the company to significant losses during the financial crisis. GE Capital's net assets are lower by $39-billion, or nine per cent, over the past twelve months. GE Capital generates 33.4 per cent of operating income – far below the pre-crisis level near 50 per cent.

The smaller financial business did not prevent the management team from improving profitability. Year-over-year gross margins improved by 1.8 per cent to 38.4 per cent.

GE's stock currently trades at 16.2 times trailing earnings and 15.6 times analyst profit projections for the next 12 months. The indicated dividend yield is 3.0 per cent.

Year-over-year profit growth was 13 per cent, so a 16-times multiple appears attractive in light of the massive order growth and improving profitability.

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