GE Aerospace Earnings: Commercial Engine Performance on Fast-Forward

Key Morningstar Metrics for GE Aerospace

• Fair Value Estimate: $266.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of GE Aerospace’s Earnings

GE Aerospace’s GE second-quarter commercial engines segment revenue grew 30% to $8 billion and earned a 28% operating margin. Defense revenue and margin were flatter, and management raised its full-year and 2028 revenue and profit expectations considerably.

Why it matters: GE’s commercial engine business delivered revenue and profit in the second quarter, exceeding even what we had expected for the third quarter. The company appears to have accelerated its recovery from supply chain disruptions, which had slowed its progress in meeting engine demand in 2024.

• We admire GE’s evident commitment to ongoing process improvements, which allow it to increase throughput in its service business and overall productivity while managing a volatile supply chain. These efforts and their result lend credibility to management’s claims that it can maintain and increase operating margins despite inflationary cost pressure.
• Management upped its near- and long-term business expectations, including raising its 2028 operating profit forecast from $10 billion to $11.5 billion. We see the target as eminently achievable, based on our detailed forecast of upcoming demand for engine overhauls and continued aircraft utilization.

The bottom line: We have raised our fair value estimate for wide-moat GE Aerospace’s shares to $266 per share from $238, reflecting increased confidence in our forecast for continued service margin expansion. The shares trade within 2% of our fair value estimate. However, we anticipate that the firm will continue to enhance its dividend and share repurchase programs over time.