General Electric's focus on its industrial businesses helped boost backlogs 13% in the third quarter and lift shares to their highest level in five years.
The conglomerate has been shrinking its finance unit, GE Capital, which weighed on overall revenue in Q3. But the U.S. shale boom and commercial aircraft rebound are boosting demand for GE's industrial products, and profit margins are improving.
"We believe industrial orders and marginal performance are the centerpiece for investor focus, and GE scored solid checks on both," said Christopher Glynn, an analyst at Oppenheimer & Co., in a report Friday.
GE (GE) earned 36 cents a share in Q3, flat from a year ago but a penny better than the consensus estimate of 35 cents from analysts polled by Thomson Reuters.
Industrial segments grew earnings by 11%, with transportation, oil and gas, and aviation all reporting profit growth in excess of 10%.
Revenue dropped 1.7% to $35.73 billion, below analysts' expectations of $35.96 billion. But oil and gas revenue jumped 18% and aviation revenue climbed 12%, offsetting a 10% drop in power and water equipment sales.
"Our industrial strength was broad based, with six of seven businesses growing earnings," said GE Chairman and CEO Jeff Immelt in a statement.
He added later in a conference call that earnings growth would accelerate in Q4 with more volume and lower costs.
Shares rose 3.5% Friday, reaching their highest level since September 2008.
GE's gas turbines should see growing demand internationally, and U.S. demand for GE's wind-energy products could pick up too, predicted Brian Langenberg, an analyst of Langenberg & Co.
"The thing that's coming back is wind," he said. "Wind is very strong.
While GE's backlog of orders pointed to strong future results, Honeywell International's outlook was less upbeat.
The maker of automotive, aerospace, climate and security systems cut its 2013 revenue forecast to $38.8 billion to $39 billion from its previous guidance of $38.9 billion to $39.3 billion.
Honeywell's Q3 earnings edged up 2.5% to $1.24 a share, matching Wall Street estimates. Revenue increased 3% to $9.65 billion, falling short of analysts' estimates of $9.92 billion.
Sales fell 11% in its defense and space division due in part to supply-chain problems and budget cuts at the U.S. government.
Shares dropped 2.5%.