GE Aerospace's stock leaps toward a 16-year high after earnings beat forecasts

By Tomi Kilgore

GE Aerospace standalone Q1 revenue rose 15%, while revenue including GE Vernova increased 11%

Shares of GE Aerospace got a big boost Tuesday as quarterly profit and revenue - including results before the spinoff of GE Vernova was completed - rose above expectations, and as the full-year outlook was lifted.

On a standalone basis, the maker of jet engines used on commercial and military aircraft said it has seen a "solid" start to the year, with revenue growth outpacing that of the combined companies.

"In all, a very strong performance for GE, reflecting real momentum at both GE Aerospace and GE Vernova," said GE Aerospace Chief Executive Larry Culp in the post-earnings call with analysts, according to an AlphaSense transcript.

And Culp said the GE Aerospace business is experiencing a "tremendous demand cycle for services, as more people fly and fly more often."

GE Aerospace's stock (GE) ran up 5.8% in midday trading, putting it on track for the highest close since May 2, 2008. GE Vernova shares (GEV) jumped 6.6%, toward its highest close since the spinoff, which took effect on April 2.

On a combined basis, first-quarter net income dropped to $1.54 billion, or $1.39 a share, from $7.36 billion, or $6.71 a share, in the same period a year ago.

Excluding nonrecurring items, such as gains on sold ownership interest, adjusted earnings per share rose to 82 cents from 27 cents to beat the FactSet consensus of 65 cents.

Revenue grew 10.8% to $16.05 billion, above the FactSet consensus of $15.25 billion.

On a standalone basis, GE Aerospace revenue rose 15% to $8.1 billion, as orders jumped 34% to $11 billion. Free cash flow of $1.7 billion was up from $800 million last year.

"[B]oth airlines and our defense customers are expanding and modernizing their fleets and choosing to do so with us, adding to our $150 billion-plus backlog and continuing to build our install base of engines and services," Culp said.

Looking ahead, GE Aerospace raised its 2024 guidance range for operating profit to $6.2 billion to $6.6 billion from $6.0 billion to $6.5 billion. Adjusted EPS is expected to be $3.80 to $4.05, compared with the current FactSet consensus of $4.25.

The company maintained its outlook for revenue of more than low-double-digit percentage growth and free cash flow of greater than $5 billion.

GE's stock has soared 56.1% year to date, while the Industrial Select Sector SPDR ETF (XLI) has advanced 7.8% and the S&P 500 has tacked on 6.1%.

-Tomi Kilgore

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04-23-24 1203ET

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