GE Aerospace Earnings: Supply Chain Constraints Ameliorating as Demand Persists

Key Morningstar Metrics for GE Aerospace

• Fair Value Estimate: $190.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of GE Aerospace’s Earnings

GE Aeropsace’s GE revenue grew 9% in 2024, led by 15% growth in commercial engine manufacturing sales as demand remained high for the Leap engine, which powers most Airbus A320s. Overall operating profit exceeded $8 billion, with adjusted operating margin expanding to 23%.

Why it matters: We expect GE Aerospace to continue to catch up to scorching demand from aircraft makers and airlines for its engines while eking out incremental ways to increase the efficiency and productivity of its turbine manufacturing and maintenance enterprise.

• By and large, the company turned in a great year, but its pace of engine deliveries was sometimes hampered by the supply chain for specialized engine components, leading Airbus to note midyear that some of its deliveries were delayed.
• Management discussed measures to improve the availability of key engine components, both for new engines and service shops, which should unleash faster delivery growth in 2025, though we expect profitability growth to follow later as the new supply chain arrangements even out.

The bottom line: We have slightly trimmed our forecast for profit growth at the wide-moat engine maker, and dropped our fair value estimate to $190 per share from $194.

• The stock seems fully valued in the market, though we note that the company plans more than $7 billion of share buybacks in 2025, as well as a proposed 30% increase of the $1.12 dividend.