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

GE Aerospace released its fourth-quarter earnings report on Jan. 22. Here’s Morningstar’s take on GE Aerospace’s earnings and stock.

Key Morningstar Metrics for GE Aerospace

• Fair Value Estimate: $293.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of GE Aerospace’s Q4 Earnings

GE Aerospace’s fourth-quarter commercial revenue grew 24% to $9.5 billion at a 24% operating margin, while defense revenue grew 13% to $2.8 billion compared with 2024. Management promised midteens commercial engine revenue growth in 2026, and investors traded the shares down over 7% on Jan. 22.

Why it matters: Our outlook for commercial aircraft entails a near doubling of the global fleet by 2042, driven by secular growth and replacement of older, less efficient aircraft. GE Aerospace stands to participate heavily in this upswing given its high market penetration across both narrow- and wide-body categories.

• As newer planes like the 737 MAX and 777X are delayed in entering service, airlines using their older aircraft and engines longer than planned benefit the aftermarket business, where GE provides replacement parts at very high incremental margins.
• In GE’s vast commercial aftermarket business, we see 6% compound revenue growth over 10 years, but with improving margins over time, driving company operating margins to more than 27% in the next decade.

Bears say: Despite the company beating its own fiscal expectations in 2025, investors seemed disappointed in management’s slightly more modest growth projections for 2026, sending the stock price down by over 7% by the afternoon of Jan. 22.

The bottom line: We have raised our fair value estimate for wide-moat GE Aerospace’s shares to $293 per share from $279, reflecting both near-term lucrative shop visits and ongoing efficiency improvements that drive our forecast for continued service margin expansion.

• The shares trade very close to our revised fair value estimate. We anticipate the firm’s continued dividend growth and share repurchases will drive attractive shareholder returns, while the franchise’s opportunity to compound its value should, all else equal, raise 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 $293 per share, representing an enterprise value/2026 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 13% compound revenue growth from manufacturing over the next decade. In the larger commercial aftermarket business, we see 6% compound revenue growth over 10 years, but with improving margins over time. Overall, including the defense and propulsion segments, we forecast a 8% compound annual revenue growth for GE Aerospace through 2035. 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.

GE competes in virtual duopolies in both the wide-body (twin-aisle) and narrow-body (single-aisle) jet engine markets against Rolls-Royce and Pratt & Whitney, respectively. Crucial to GE Aerospace’s moat is the fact that turbine engines typically fly for more than 20 years, and the company’s commercial and engine services business (representing about 75% of total revenue) makes 70% of that revenue from servicing its engines. This means that GE Aerospace alone commands approximately 40% of the global engine maintenance, repair, and overhaul market, using Oliver Wyman’s MRO market forecasts.

Read more about GE Aerospace’s economic moat.

Financial Strength

As of year-end 2025, GE Aerospace’s net debt amounted to just $8 billion on a $130 billion balance sheet. GE’s gross debt of $20 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.

Its $40 billion securities portfolio balances the similarly valued liabilities of GE’s legacy long-term-care insurance portfolio. We expect GE Aerospace to opportunistically wind down or dispose of its real estate and long-term-care insurance portfolios if market conditions are suitable. Until then, a remote financial risk remains, should payouts from long-term-care policies outstrip the reserves GE has put aside to cover them. Our analysis of the scenarios potentially impacting the insurance book nets to plus or minus $1 billion in liabilities, which is well within GE’s funding cushion, barring doomsday scenarios that could affect the securities assets. Thus, only in a vanishingly improbable scenario would we foresee the insurance book depleting GE Aerospace’s resources.

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. This was exemplified by Pratt & Whitney’s experience with a metallurgical flaw in its GTF engine, which resulted in over $3 billion in cash charges. 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.

From an environmental, social, and governance standpoint, we believe GE faces several known risks, including government investigations into its trade practices, shareholder lawsuits, and potential embargoes from defense sales. The most prominent ESG risk relates to carbon emissions from aerospace engines, though we point out that GE is developing a next-generation sustainable engine in its CFM Rise program. If any of these risks were to materialize (as they have for Airbus in the case of export rule infractions and for Boeing and Pratt & Whitney in the case of quality lapses and customer remuneration). In that case, they represent financially quantifiable and finite risks that do not undermine the company’s intangible assets or switching cost moat sources, in our view.

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 Rachel Schlueter.