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GE Aerospace (GE), headquartered in Evendale, Ohio, designs and produces commercial and defense aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. Valued at $175.44 billion by market cap, the company is a global leader in aerospace propulsion, services, and systems, supporting 44,000 commercial and 26,000 military aircraft engines.
Shares of this aerospace giant have outperformed the broader market considerably over the past year. GE has gained 72.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 15.5%. In 2024, GE stock is up 52.5%, surpassing the SPX’s 8.4% rise on a YTD basis.
Zooming in further, GE’s outperformance looks more pronounced compared to the S&P 500 Industrial Sector SPDR (XLI). The exchange-traded fund has gained about 10.5% over the past year. Moreover, GE’s gains on a YTD basis outshine the ETF’s 4.9% returns over the same time frame.
GE’s overall performance can be attributed to the continued strong demand for airplane and engine spare parts. It has signed agreements with British Airways, Japan Airlines, Turkish Airlines, and National Airlines for a total of 24 widebody aircraft engines. Additionally, GE reached a milestone by delivering two T901 engines for the U.S. Army's UH-60 Black Hawk program.
The company's joint venture with Safran, CFM International, supplies engines for popular aircraft such as the Airbus A320neo and Boeing 737 MAX. More airplane deliveries would lead to more orders for GE’s airplane engines. The recent spin-off of GE Vernova has also bolstered investor confidence. GE's promising earnings outlook and increased profitability further demonstrate the company's strength in the market.
On Jul. 23, GE shares closed up more than 5% after reporting its Q2 results. Its adjusted EPS of $1.20 topped Wall Street estimates of $0.98. The company’s adjusted revenue of $8.22 billion was about $200 million below expectations. Total orders increased 18% year over year to $11.20 billion, and GE generated $1 billion in cash from operating activities. The company raised its full-year guidance and expects adjusted EPS between $3.95 and $4.20, up from $3.80 and $4.05. Moreover, GE expects its operating profit to be between $6.50 billion and $6.80 billion, and it expects its free cash flow to be between $5.30 billion and $5.60 billion.
For the current fiscal year, ending in December, analysts expect GE’s EPS to grow 47.7% to $4.15 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 15 analysts covering GE stock, the consensus rating is a “Strong Buy.” That’s based on 13 “Strong Buy” ratings, one “Moderate Buy,” and one “Hold.”
This configuration has been consistent over the past three months.
Recently, RBC Capital analyst maintained an “Outperform” rating on GE stock and raised the price target from $175 to $190, implying a potential upside of 18.5% from current levels.
The mean price target of $196.93 represents a 22.9% premium to GE’s current price levels. The Street-high price target of $215 suggests an upside potential of 34.1%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
