GE Aerospace's Earnings Outlook Remains Positive Despite Margin Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5h ago
0mins
Source: Fool
- Earnings Guidance: GE Aerospace's Q4 2025 earnings report implied that operating profit margins would remain flat compared to 2025, despite a projected low double-digit revenue growth in 2026, leading to a 1.68% drop in stock price as the market reacted negatively.
- Engine Sales Model: The core business involves designing and manufacturing commercial aircraft engines, where newly installed engines are often sold at a loss initially, but the lucrative aftermarket revenue from long-term service agreements is expected to support future profitability.
- Spare Engine Ratio Impact: As the supply chain crisis eases, airlines are reducing their spare engine ratios, with CFO Rahul Ghai indicating that margins are expected to remain flat in 2026, posing challenges to short-term profit outlook.
- Long-Term Profit Potential: Despite short-term margin pressures, management noted that GE engines maintain high utilization rates, with a projected retirement rate of 2% in 2026, suggesting that more older planes will continue to operate, which is beneficial for aftermarket sales growth.
Analyst Views on GE
Wall Street analysts forecast GE stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for GE is 345.67 USD with a low forecast of 275.00 USD and a high forecast of 386.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
9 Analyst Rating
8 Buy
0 Hold
1 Sell
Strong Buy
Current: 297.470
Low
275.00
Averages
345.67
High
386.00
Current: 297.470
Low
275.00
Averages
345.67
High
386.00
About GE
General Electric Company, doing business as GE Aerospace, is a global aerospace propulsion, services, and systems company. The Company has an installed base of approximately 45,000 commercial and 25,000 military aircraft engines. The Company operates through two segments: Commercial Engines & Services and Defense & Propulsion Technologies. The Commercial Engines & Services segment designs, develops, manufactures and services jet engines for commercial airframes, as well as business aviation and aeroderivative applications. Its services include maintenance, repair and overhaul (MRO) of engines and the sale of spare parts and offers services under a variety of arrangements. The Defense & Propulsion Technologies segment provides defense engines and critical aircraft systems and consists of its Defense & Systems and Propulsion & Additive Technologies businesses. Its portfolio of brands includes Avio Aero, Unison, Dowty Propellers and Colibrium Additive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
