GE Aerospace (GE)

Industrial conglomerate GE Aerospace (NYSE:GE) announced better-than-expected revenue in Q3 CY2025, with sales up 36.2% year on year to $12.18 billion. Its non-GAAP profit of $1.66 per share was 13% above analysts’ consensus estimates.

Company Overview

One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE:GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.

Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand for general industrial machinery companies. Those who innovate and create digitized solutions can spur sales and speed up replacement cycles, but all general industrial machinery companies are still at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

Competitors offering similar products include Siemens AG (NYSE:SIE), Honeywell International (NYSE:HON), and Raytheon Technologies (NYSE:RTX).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, GE Aerospace’s 10.4% annualized revenue growth over the last five years was solid. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. GE Aerospace’s annualized revenue growth of 15.2% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, GE Aerospace reported wonderful year-on-year revenue growth of 36.2%, and its $12.18 billion of revenue exceeded Wall Street’s estimates by 11.7%.

Looking ahead, sell-side analysts expect revenue to grow 10.6% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and indicates the market is forecasting success for its products and services.

All else equal, we prefer higher gross margins because they make it easier to generate more operating profits and indicate that a company commands pricing power by offering more differentiated products.

GE Aerospace has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a negative 47.2% gross margin over the last five years. That means GE Aerospace lost $47.22 for every $100 in revenue.

GE Aerospace has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.9%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, GE Aerospace’s operating margin rose by 10.7 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, GE Aerospace generated an operating margin profit margin of 18.9%, down 1.5 percentage points year on year. The reduction is quite minuscule and shareholders shouldn’t weigh the results too heavily.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

GE Aerospace’s EPS grew at an astounding 34.7% compounded annual growth rate over the last five years, higher than its 10.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into GE Aerospace’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, GE Aerospace’s operating margin declined this quarter but expanded by 10.7 percentage points over the last five years. Its share count also shrank by 3.7%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For GE Aerospace, its two-year annual EPS growth of 43.6% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, GE Aerospace reported adjusted EPS of $1.66, up from $1.15 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects GE Aerospace’s full-year EPS of $6.13 to grow 3.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

GE Aerospace has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 19.4% over the last five years.

Taking a step back, we can see that GE Aerospace’s margin dropped by 7.5 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

GE Aerospace’s five-year average ROIC was 13.5%, higher than most industrials businesses. This illustrates its management team’s ability to invest in profitable growth opportunities and generate value for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, GE Aerospace’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

GE Aerospace reported $13.51 billion of cash and $20.84 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $9.98 billion of EBITDA over the last 12 months, we view GE Aerospace’s 0.7× net-debt-to-EBITDA ratio as safe. We also see its $287 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly GE Aerospace blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 1.7% to $307.97 immediately following the results.

Updated: December 4, 2025 at 10:32 PM EST

When considering an investment in GE Aerospace, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

There is a lot to like about GE Aerospace. To begin with, its revenue growth was solid over the last five years, and its growth over the next 12 months is expected to accelerate. And while its diminishing returns show management's recent bets still have yet to bear fruit, its powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits. On top of that, GE Aerospace’s impressive operating margins show it has a highly efficient business model.

GE Aerospace’s P/E ratio based on the next 12 months is 42.8x. There’s no doubt it’s a bit of a market darling given the lofty multiple, but we don’t mind owning a high-quality business, even if it’s expensive. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with high valuations.

Wall Street analysts have a consensus one-year price target of $339.69 on the company (compared to the current share price of $292.74).