GE's Q1 industrial performance 'impressive': Analyst

General Electric on Friday delivered quarterly earnings that beat analysts' estimates by a penny a share, but revenue fell short of expectations.

With GE's announcement last week to shed its financial services business, the biggest takeaway was that its core industrial business did not slow much in the first quarter, said Jack De Gan, senior adviser at investment management firm Harbor Advisory.

Quarterly industrial profit rose 9 percent as GE focuses more on its manufacturing businesses, helped by improved profit margins. Organic growth in the industrial sales were up 3 percent, excluding foreign exchange charges.

"In light of the environment and the deterioration in the currencies … I think their industrial performance is pretty impressive," De Gan said on CNBC's "Squawk Box." "I think it was a pretty good performance overall."

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De Gan noted that GE fell just short of guidance issued in December, despite considerable volatility in currency and commodity markets.

"We've had a very slow first quarter certainly here in the U.S. To just fall 1 percent below a range that was set four months ago, I don't think is all that bad, especially since oil has continued to drop dramatically year to date, and 12-percent of revenues come from the oil and gas business," he said.

Shares of GE were lower in premarket trading following the announcement. (Click here to track its share price)

The multinational corporation posted fiscal first-quarter earnings excluding items of 31 cents per share, down from 33 cents a share in the year-earlier period.

GE earnings beat Street; revenue misses
GE earnings beat Street; revenue misses

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Revenue fell to $29.4 billion from $34.18 billion a year ago.

Wall Street had expected GE to deliver quarterly earnings per share of 30 cents on $34.23 billion in revenue, according to a consensus estimate from Thompson Reuters.

On April 10, the company announced an agreement to sell the bulk of the assets of GE Capital Real Estate for approximately $26.5 billion. The General Electric board also approved a buyback program of up to $50 billion.

Overall, GE posted a first-quarter net loss of $13.6 billion, or $1.35 per share. Results were weighed down by about $16 billion in charges tied to its exit of GE Capital assets, which the company disclosed last week in its surprise announcement to shed much of its finance business.

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"Going forward, analysts are going to be looking almost exclusively at the industrial side of the business. It's going to be easier to analyze, smaller and more focused," De Gan said. "This is their opportunity to clean everything up so that going forward they're an industrial that has no skeletons left."

Nick Heymann, electrical equipment analyst at William Blair & Co., attributed the 1-cent upside surprise in EPS to the industrial business, which benefited from better margins. That margin improvement is coming from a new initiative sponsored by GE's Vice Chairman Daniel Heintzelman to drive gross margin rather than just reducing costs.

GE is on track for its projected $1.10 to $1.20 EPS from industrial business. Heymann sees the company's aviation and health care business offsetting a potential 5-percent sales decline and lower operating profit.

DISCLOSURE: De Gan owns shares of GE, and his firm has a greater than 1-percent stake in the stock. Harbor Advisory does not provide investment banking services to GE. Neither Nick Heymann nor his family own shares of GE. William Blair & Co. does not own greater than a 1-percent stake or provide banking services to GE.

—Reuters contributed to this story