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GE Aerospace
Industrials | Aerospace & Defense
⚡ Executive Summary
📊 The Bottom Line
GE Aerospace is a global leader in aircraft propulsion and services, boasting a vast installed engine base that generates significant recurring service revenue. The company operates in a critical, high-barrier-to-entry industry, underpinned by strong technological capabilities and strategic partnerships. Its business model is fundamentally sound, focusing on innovation and long-term contracts.
⚖️ Risk vs Reward
With a current price of US$306.79, GE Aerospace trades below its average analyst price target of US$357.24, suggesting potential upside. The strong buy consensus indicates analyst confidence in future performance. However, valuation ratios suggest it trades at a premium to some industry averages, balancing the risk-reward profile for new investors.
🚀 Why GE Could Soar
- • Continued recovery in global air travel demand, especially for commercial aviation, drives new engine orders and high-margin aftermarket services.
- • Increased defense spending and modernization efforts globally provide a stable and growing revenue stream for military aircraft engines and systems.
- • Technological advancements in fuel efficiency and sustainable aviation, spearheaded by GE, could capture greater market share and command premium pricing.
⚠️ What Could Go Wrong
- • Persistent global supply chain disruptions could hinder production and delivery, impacting revenue and profitability targets.
- • Geopolitical instability or an economic downturn could lead to reduced demand for both commercial and defense aerospace products and services.
- • Intensified competition or significant technological breakthroughs by rivals could erode GE Aerospace's market share and pricing power.
🏢 Company Overview
💰 How GE Makes Money
- • GE Aerospace designs, produces, and services commercial and defense aircraft engines, along with integrated engine components, electric power, and aircraft systems.
- • The company generates significant revenue from maintenance, repair, and overhaul (MRO) services, as well as the sale of spare parts for its large installed base of jet engines.
- • It serves a global customer base including commercial airlines, business aviation, and governments/militaries across various regions like the United States, Europe, and Asia.
Revenue Breakdown
Commercial Engines & Services (CES)
76%
Designs, manufactures, and services jet engines and spare parts for commercial aircraft and business aviation.
Defense & Propulsion Technologies (DPT)
24%
Develops and services jet engines, avionics, and power systems for governments and militaries.
🎯 WHY THIS MATTERS
This diversified revenue model, heavily weighted towards recurring services for its vast installed base, provides stable and high-margin income streams. The long operational life of aircraft engines ensures sustained demand for parts and maintenance, offering a predictable revenue foundation.
⭐ Competitive Advantage: What Makes GE Special
1. Installed Base & Recurring Services
GE Aerospace benefits from an immense global installed base of approximately 44,000 commercial and 26,000 military aircraft engines. This leads to a highly predictable and profitable stream of maintenance, repair, and overhaul (MRO) services, as well as spare parts sales, over decades. The high cost and complexity of switching engine providers create significant customer lock-in.
2. Technological Leadership & R&D
The company maintains a strong position in cutting-edge aerospace technology, continually investing in research and development for improved fuel efficiency, reduced emissions, and enhanced performance. This leadership in innovation creates a barrier to entry for new competitors and allows GE to secure long-term contracts for advanced propulsion systems.
3. Global Reach & Strategic Partnerships
GE Aerospace operates globally with a broad geographical presence across the Americas, Europe, Asia, and the Middle East. Its strategic joint ventures, such as CFM International with Safran, are crucial for widespread market access, sharing development costs, and dominating specific market segments, reinforcing its competitive position worldwide.
🎯 WHY THIS MATTERS
These integrated advantages — a vast service-generating installed base, continuous technological innovation, and extensive global partnerships — collectively create a formidable economic moat. This allows GE Aerospace to maintain leadership in a capital-intensive industry and generate substantial, predictable cash flows over the long term.
👔 Who's Running The Show
H. Lawrence Culp Jr.
Chairman & CEO
62-year-old H. Lawrence Culp Jr. serves as Chairman and CEO. He joined GE in 2018 and has been instrumental in the company's transformation and deleveraging strategy, leading the spin-off of GE Healthcare and spearheading the creation of GE Aerospace as a standalone entity. His leadership focuses on operational excellence and shareholder value creation.
⚔️ What's The Competition
The global aircraft engine manufacturing market is highly concentrated, characterized by a few dominant players due to immense R&D costs, strict regulatory hurdles, and the critical need for reliability. Competition primarily revolves around engine performance, fuel efficiency, maintenance costs, and long-term service agreements.
📊 Market Context
- Total Addressable Market - The global commercial aircraft engine market is valued at hundreds of billions, projected for steady growth driven by increased air travel and airline fleet modernization.
- Key Trend - Emphasis on sustainable aviation and the development of next-generation, more fuel-efficient engines is the most critical industry trend.
Competitor
Description
vs GE
Pratt & Whitney (Raytheon Technologies)
A major American aerospace manufacturer, producing aircraft engines for commercial and military aircraft. Known for its geared turbofan engines.
Direct competitor in both commercial and military engine segments, often competing for large airline and defense contracts.
Rolls-Royce Holdings plc
A British multinational aerospace and defense company, a leading producer of engines for widebody commercial aircraft and defense sectors.
Primary competitor in the large widebody commercial aircraft engine market and a key player in defense, often competing for long-haul fleet orders.
Safran S. A.
A French international high-technology group, active in the aerospace propulsion and equipment, space and defense markets. Co-owns CFM International with GE.
A key partner through the CFM International joint venture, but also a competitor in other aerospace components and systems.
Market Share - Global Commercial Aircraft Engine Market
CFM International (GE/Safran)
39%
Pratt & Whitney
30%
Rolls-Royce
16%
Others
15%
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 1 Strong Sell, 2 Hold, 14 Buy, 2 Strong Buy
1
2
14
2
12-Month Price Target Range
Low Target
US$290
-5%
Average Target
US$357
+16%
High Target
US$394
+28%
Closing: US$306.79 (30 Jan 2026)
🚀 The Bull Case - Upside to US$394
1. Strong Commercial Aerospace Recovery
High Probability
Increased global air travel, driven by leisure and business demand, will lead to higher utilization of existing aircraft, boosting demand for GE's high-margin aftermarket services and accelerating new engine orders from airlines. This could add billions to revenue.
2. Robust Defense Spending and Modernization
High Probability
Continued geopolitical tensions and global defense modernization initiatives will ensure sustained demand for GE Aerospace's military engines and systems. Long-term defense contracts provide stable, predictable revenue streams, safeguarding against commercial sector volatility.
3. Innovation in Sustainable Aviation Technologies
Low Probability
GE's investment in advanced, more fuel-efficient, and sustainable engine technologies (e.g., hybrid-electric propulsion) positions it to capture future market share as airlines prioritize environmental goals and operational cost savings. This differentiation could drive premium pricing and new contract wins.
🐻 The Bear Case - Downside to US$290
1. Persistent Supply Chain Disruptions
Medium Probability
Ongoing shortages of critical components and raw materials could limit GE Aerospace's ability to meet production targets, leading to delayed deliveries, increased costs, and ultimately impacting revenue growth and profit margins.
2. Global Economic Downturn and Geopolitical Instability
Medium Probability
A significant global recession or escalating geopolitical conflicts could severely curb air travel demand and potentially lead to reductions in defense budgets, directly impacting new engine orders and lucrative aftermarket service contracts.
3. Intense Competition and Pricing Pressure
Low Probability
Aggressive competition from rivals like Pratt & Whitney and Rolls-Royce, particularly in new engine development or pricing of service contracts, could pressure GE Aerospace's market share and profitability, especially in key growth segments.
🔮 Final thought: Is this a long term relationship?
Owning GE Aerospace for a decade could prove rewarding for investors seeking exposure to a critical and resilient industry. Its strong installed base and recurring service revenues provide a durable moat, likely to withstand economic cycles. Key risks include managing ongoing supply chain volatility and adapting to the accelerating pace of sustainable aviation innovation. The proven leadership of H. Lawrence Culp Jr. in transforming GE suggests capable hands at the helm for long-term strategic execution. The company is well-positioned to benefit from sustained demand for air travel and defense, but execution on next-gen technology is paramount.
📋 Appendix
Financial Performance
Metric
31 Dec 2025
31 Dec 2024
31 Dec 2023
Income Statement
Revenue
US$45.85B
US$38.70B
US$35.35B
Gross Profit
US$16.89B
US$14.39B
US$12.41B
Operating Income
US$8.68B
US$6.76B
US$4.72B
Net Income
US$8.70B
US$6.56B
US$9.48B
EPS (Diluted)
8.14
5.99
8.36
Balance Sheet
Cash & Equivalents
US$12.39B
US$13.62B
US$15.20B
Total Assets
US$130.17B
US$123.14B
US$173.30B
Total Debt
US$20.50B
US$19.27B
US$20.52B
Shareholders' Equity
US$18.68B
US$19.34B
US$27.40B
Key Ratios
Gross Margin
36.8%
37.2%
35.1%
Operating Margin
18.9%
17.5%
13.3%
Revenue Growth
46.60
33.90
34.60
Analyst Estimates
Metric
Annual (31 Dec 2026)
Annual (31 Dec 2027)
EPS Estimate
US$7.40
US$8.46
EPS Growth
+16.2%
+14.3%
Revenue Estimate
US$48.1B
US$52.6B
Revenue Growth
+13.6%
+9.5%
Number of Analysts
18
17
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 37.19 | The price-to-earnings ratio (trailing twelve months) indicates how much investors are willing to pay for each dollar of past earnings, reflecting market expectations and valuation relative to historical performance. |
| Forward P/E | 36.28 | The forward price-to-earnings ratio uses estimated future earnings to provide a forward-looking valuation, reflecting expectations for future profitability. |
| Price/Sales (TTM) | 7.06 | The price-to-sales ratio (trailing twelve months) measures the stock's price relative to its revenue, useful for valuing companies with inconsistent earnings or in early growth stages. |
| Price/Book (MRQ) | 17.23 | The price-to-book ratio (most recent quarter) compares the stock's market value to its book value per share, indicating how much investors are paying for the company's net assets. |
| EV/EBITDA | 33.05 | Enterprise Value to EBITDA indicates how many times EBITDA it takes to equal the enterprise value, providing a valuation multiple that accounts for debt. |
| Return on Equity (TTM) | 0.45 | Return on Equity (trailing twelve months) measures the profitability of a company in relation to the equity invested by shareholders, indicating how efficiently shareholder funds are used to generate profits. |
| Operating Margin | 0.19 | Operating margin measures how much profit a company makes on each dollar of sales after accounting for variable costs of production, indicating operational efficiency. |