After Earnings, Is GE Aerospace Stock a Buy, a Sell, or Fairly Valued?

GE Aerospace released its third-quarter earnings report on Wednesday, Oct. 22. Here’s Morningstar’s take on GE Aerospace’s earnings and stock.

Key Morningstar Metrics for GE Aerospace

• Morningstar Rating: $279.00
• Morningstar Rating: ★★★
• Economic Moat: Wide
• Fair Value Uncertainty: Medium

What We Thought of GE Aerospace’s Q3 Earnings

GE Aerospace’s third-quarter commercial revenue grew 27% to $8.9 billion at 27.4% operating margin, while defense revenue grew 26% to $2.4 billion. Margin rose to 13.6% compared with the year-ago quarter. Management raised its full-year revenue, profit, and cash flow expectations commensurately.

Why it matters: It seems efforts over the past 18 months to recover from the supply chain disruptions that had slowed its progress in meeting engine demand in 2024 have begun to pay off, just as a spike in demand for engine servicing arrived at GE and the industry’s doorstep.

• While demand for engine service historically follows the growth of aircraft departures, which have decelerated recently after their postpandemic rebound, in mid-2025, a wave of pent-up demand from airlines to service older engines like the CFM56 and GE90 drove unexpectedly strong business results just as GE’s parts supply chain seems to be loosening up.
• 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.

The bottom line: We have raised our fair value estimate for wide-moat GE Aerospace’s shares to $279 per share from $266, reflecting both near-term lucrative shop visits and ongoing efficiency improvements at the company, reflected in our forecast for continued service margin expansion.

• The shares trade within around 7% of our fair value estimate. We anticipate the firm’s continued dividend growth and share repurchases over time will drive attractive shareholder returns, while the franchise’s opportunity to compound its value should, all else equal, drive our fair value estimate up at our cost of equity of 9% per year.

Fair Value Estimate for GE Aerospace

With its 3-star rating, we believe GE Aerospace stock is fairly valued compared with our long-term fair value estimate of $279, which represents an enterprise value/2025 EBITDA ratio of nearly 24 times. 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.

Given its portfolio of newer engines entering service, we see decades of sales and eventual profitability growth from manufacturing new engines in the medium to long term, while the company’s older workhorse engines should still provide over a decade of healthy profits, primarily from aftermarket engine services. We forecast 14% compound revenue growth from manufacturing over the next decade. In the larger commercial aftermarket business, we see 7.7% compound revenue growth over 10 years, but with improving margins over time. Overall, including the defense and propulsion segments, we forecast a 9% compound annual revenue growth for GE Aerospace through 2034. But that is just the top line.

Read more about GE Aerospace’s fair value estimate.

Economic Moat Rating

GE Aerospace meets our highest standard of a wide-moat business and was the crown jewel of the GE conglomerate. We believe it will outearn its cost of capital by a comfortable margin for at least the coming 20 years. We assign GE Aerospace a wide economic moat rating based on switching costs and intangible assets stemming from its massive installed base of aircraft engines and the complex technical know-how it takes to design, produce, and maintain them.

Read more about GE Aerospace’s economic moat.

Financial Strength

As of year-end 2024, and accounting for the spinoff of GE Vernova, GE Aerospace’s net debt amounted to just $4.6 billion on a $120 billion balance sheet. GE’s gross debt of $19 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.

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.

More critical to the core business 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. Supply chain bottlenecks or workforce disruptions could mar the company’s revenue and profitability in one or more product lines at almost any time. 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. Since a good portion of GE’s engines are serviced on long-term contracts, the company assumes most of the risk of cost overruns from unforeseen repairs.

We see minimal risk to GE’s businesses from import or export tariffs, due to many offsetting customs provisions in the global aerospace supply chain and the already restricted list of sources defense contractors can use for inputs.

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 adopt to enter service in the 2040s.
• Burgeoning demand for its engines could place GE Aerospace’s manufacturing and supply chain under disruptive strain, not just frustrating customers but 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 mar the profitability of the program.

This article was compiled by Frank Lee.