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

GE Aerospace released its first-quarter earnings report on April 21. Here’s Morningstar’s take on GE Aerospace’s earnings and stock.

Key Morningstar Metrics for GE Aerospace

• Fair Value Estimate
  : $307.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of GE Aerospace’s Q1 Earnings

GE Aerospace’s commercial engines segment revenue grew 34% year over year with a 26.4% operating margin in the first quarter. Defense revenue and margin were flatter but robust. Management reaffirmed its full-year revenue and profit expectations, notwithstanding recent macroeconomic turbulence.

Why it matters: We maintain our admiration for the formidable franchise that GE Aerospace has cultivated and the discipline with which it continues to pursue productivity-enhancing projects throughout the business. In turbulent times, the true durability of a moat like GE’s can prove its worth.

• The company shipped 214 more commercial engines in the first quarter than last year, the vast majority in the Leap family. New engine deliveries provide generally lower margins than aftermarket sales, but the commercial margin remained healthy above 26%.
• With high global aircraft utilization and fewer recent retirements of older jets in recent months, the commercial aftermarket business grew 39% year on year.

The bottom line: We have raised our fair value estimate for wide-moat GE Aerospace to $307 per share from $293 due to the time value of money. The shares trade within 10% of our fair value estimate, though we anticipate the firm will continue to enhance its dividend and share-repurchase programs.

Fair Value Estimate for GE Aerospace Stock

With its 3-star rating, we believe GE Aerospace’s stock is fairly valued compared with our long-term fair value estimate of $307, representing an enterprise value/2026 EBITDA ratio of nearly 27 times our 2026 projections and 41 times our 2026 earnings estimate. Overall, including the defense and propulsion segments, we forecast a 8% compound annual revenue growth for GE Aerospace through 2035. 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.

Read more about GE Aerospace’s fair value estimate.

Economic Moat Rating

We assign GE Aerospace a wide moat based on switching costs and intangible assets stemming from its massive installed base of aircraft engines and its complex technical know-how. We think GE Aerospace’s status as the premier aircraft engine manufacturer has become self-reinforcing due to the scale the company achieves through market penetration and its ability to reinvest in R&D. We ascribe GE Aerospace’s second reporting business unit, defense and propulsion technologies, with a narrow moat. These have technical complexity and aftermarket revenue, but they do not present the volume or scale opportunity that the commercial engine business enjoys.

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. 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. The company announced that it plans to return 100% of available free cash flow to shareholders over the next three years through a mix of dividends and share buybacks. We don’t have a problem with the company maintaining current debt balances.

Read more about GE Aerospace’s financial strength.

Risk and Uncertainty

We assign GE Aerospace a Medium Uncertainty Rating. Critical to the core business are two operational risks: supply chain disruptions and flaws in engine designs or manufacturing quality. We see minimal risk to GE’s businesses from import or export tariffs due to many offsetting customs provisions.

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.

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, frustrating customers and 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 Jillian Moore.