Ahead of GE Aerospace Earnings, Is the Stock a Buy, a Sell, or Fairly Valued?

GE Aerospace is set to release its third-quarter earnings report on Oct. 20. Here’s Morningstar’s take on what to look for in GE Aerospace’s earnings and the outlook for its stock.

Key Morningstar Metrics for GE Aerospace

• Fair Value Estimate
  : $347.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

GE Aerospace Earnings Release Date

• Tuesday, Oct. 20, before the start of trading

What to Watch for in GE Aerospace’s Q3 Earnings

• Overall, we’re watching deliveries to Boeing and Airbus, and whether they see any new supply chain bottlenecks or the relief of old bottlenecks. Management might tie this topic into discussion of the recently announced acquisition of supplier Consolidated Precision Products.
• We’d like to hear whether GE sees any signs of weakness in engine maintenance schedules, or accelerated retirements of old planes as airlines cut back incremental capacity due to higher fuel prices. We don’t expect them to, but this theme has had investors worrying about the aircraft aftermarket generally and has made GE Aerospace stock unusually sensitive to oil prices lately.
• We’re curious if management will comment on the testing of the new GE9X engine for the Boeing 777X. There were rumors that Boeing wanted GE to improve or redesign parts of the engine.

The following are excerpts from Morningstar’s company report on GE Aerospace.

Fair Value Estimate for GE Aerospace

Having declined 19% since fuel prices spiked in early August, we believe GE Aerospace stock is about 11% undervalued. Our fair value estimate of $347 per share represents an enterprise value/2026 estimated EBITDA ratio of 27 times and 44 times our 2026 earnings estimate.

With GE’s engines powering nearly three-fourths of global commercial flights, the biggest profit driver for the company is simply more airplanes continuing to take off and land. Overall, including the defense and propulsion segments, we forecast a 10% compound annual revenue growth for GE Aerospace through 2035. But that is just the top line.

We appreciate the lean operating methods that CEO Larry Culp and his team have implemented at GE Aerospace. We think these programs, and the rigor with which the team implements them, lend some credibility to the company’s claims that it can achieve ongoing productivity improvements in its manufacturing and service arms. Our aggregate forecast shows commercial aerospace margins approaching 29% in our decade-long forecast period, and defense margins just over 22%.

Read more about GE Aerospace’s fair value estimate.

Economic Moat Rating

We assign GE Aerospace a wide moat based on customer switching costs stemming from its unmatched installed base of aircraft engines with very long useful lives and intangible assets derived from the complex technical know-how it takes to design, produce, and maintain them.

GE competes in virtual duopolies in the wide-body and narrow-body jet engine markets against Rolls-Royce and Pratt & Whitney, respectively. Crucial to GE Aerospace’s moat is the fact that turbine engines typically fly for more than 20 years, and the company’s commercial and engine services business (representing about 75% of total revenue) makes 70% of that revenue from servicing engines and selling proprietary replacement parts. This means GE Aerospace alone commands approximately 40% of the global engine maintenance, repair, and overhaul market, using Oliver Wyman’s MRO market forecasts.

We believe intangible assets are manifest in the technical knowledge and tooling needed to design and manufacture extensively engineered turbine parts that spin at thousands of revolutions per minute and must regularly and reliably heat up to over 1,000 degrees Fahrenheit. We think GE Aerospace’s status as the premier aircraft engine manufacturer has become self-reinforcing due to the scale the company achieves through market penetration and its ability to reinvest in R&D and apply the resulting know-how over more engine families than any other provider.

Read more about GE Aerospace’s economic moat.

Financial Strength

As of year-end 2025, GE Aerospace’s net debt amounted to just $8 billion on a $130 billion balance sheet. GE’s gross debt of $20 billion comes in under 2 times EBITDA coverage and is lower than that of many aerospace peers. We expect GE Aerospace’s EBITDA to grow handsomely over time and think the company’s credit ratings are likely to improve.

Its $40 billion securities portfolio balances the similarly valued liabilities of GE’s legacy long-term-care insurance portfolio. Only in a vanishingly improbable scenario would we foresee the insurance book depleting GE Aerospace’s resources.

Read more about GE Aerospace’s financial strength.

Risk and Uncertainty

We assign GE Aerospace a Medium Uncertainty Rating. The company bears some remote financial risk and ongoing operational risk in its manufacturing and service business.

Most critical to the franchise are two operational risks. Complex manufacturing is subject to supply chain risk, including the materials needed to build or service an engine, as well as the people who build them. A more pernicious risk to long-term profitability would be posed by a flaw in one of the company’s engine designs or manufacturing quality.

From an environmental, social, and governance standpoint, the most prominent risk relates to carbon emissions from aerospace engines, though we point out that GE is developing a next-generation sustainable engine in its CFM Rise program.

Read more about GE Aerospace’s risk and uncertainty.

GE Bulls Say

• Bears vastly underestimate the incremental profits GE will make from operating leverage as commercial aerospace fully recovers and its Leap engine aftermarket program enters its profitable phase.
• The Leap engine is installed on a growing majority of the popular Airbus A320neo family, compounding GE’s prospects for decades of profitable aftermarket revenue from its large installed fleet of engines.
• Even the fleet of older engines like the GE90, which went into service in 1995 and powers most Boeing 777s, has yet to see most of its shop visits to GE.

GE Bears Say

• GE is all in on its experimental open-fan Rise design for the next generation of commercial engines, which aircraft makers might or might not adopt to propel new jets in the 2040s.
• Burgeoning demand for its engines could further strain GE Aerospace’s manufacturing and supply chain, frustrating customers and hampering efficiency.
• Engines sold with long-term service contracts effectively transfer risk to the manufacturer for its performance over time, which can result in higher-than-anticipated maintenance costs and dent the profitability of the program.

This article was compiled by Colin Laidley.