GE Aerospace’s GE shares have gained 29.5% in the past year, outpacing the S&P 500 composite’s growth of 20.1% and the industry’s 4.8% decline. Shares of the leading designer and producer of jet engines have also outperformed other industry players like RTX Corporation RTX and L3Harris Technologies, Inc. LHX, which have returned 23.8% and 3%, respectively, over the said time frame.
GE Outperforms the Industry, S&P 500 & Peers
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Closing at $340.70 yesterday, the stock is trading below its 52-week high of $382.97 but significantly higher than its 52-week low of $254.66. The stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.
GE Shares’ 50-Day and 200-Day SMA
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What’s Behind GE Stock’s Momentum?
The strongest driver of GE Aerospace at the moment is the persistent strength in its Commercial Engines & Services business. Growing popularity for LEAP and GEnx engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is driving its Commercial Engines & Services business. In the second quarter of 2026, GE clinched a contract from Copa Airlines to deliver up to 120 LEAP-1B engines.
The company highlighted its continued progress under the FLIGHT DECK lean model, including operational improvements that contributed to the Commercial Engines & Services business’ revenues. The business’ revenues and orders jumped 27% and 18%, respectively, on a year-over-year basis in the quarter. GE’s total engine deliveries increased 31% in the quarter, including 41% growth in LEAP deliveries, indicating better throughput as it works through customer demand.
Solid demand for the company’s propulsion & additive technologies, critical aircraft systems and aftermarket services in the defense sector is boosting the Defense & Propulsion Technologies business’ performance. In the second quarter, revenues from GE’s Defense & Systems were up 12% on growth in both services and equipment, including unit deliveries rising 7%. Propulsion & Additive Technologies revenues grew 23%, led by Avio Aero.
In the second quarter, it clinched a deal from Turkish Aerospace to deliver F404 engines for the latter’s HÜRJET advanced jet trainer program. It also received an order from Leonardo Helicopters that would involve GE supplying CT7 engines.
The company remains focused on rewarding its shareholders handsomely through dividends and share repurchases. In the first six months of 2026, GE paid dividends of $873 million, up 26.9% year over year, to its shareholders. In the same period, it bought back shares for $4.2 billion. Also, the company raised its dividend by 30.6% to 36 cents per share in February 2026.
Near-Term Concerns Prevail
Despite the positives, GE has been grappling with high costs and operating expenses. In the first six months of 2026, its cost of sales surged 29.2% year over year to $16.6 billion, while selling, general and administrative expenses increased 16.8% to $2.2 billion. Research and development expenses also rose 25.3% to $900 million in the same period. In the first six months, GE’s operating profit margin contracted 160 basis points to 21.8%.
Also, the rising debt level has been concerning for the company. Exiting the second quarter, GE Aerospace’s total borrowings were $19.2 billion. The figure comprised $2 billion of short-term borrowings and $17.2 billion of long-term borrowings.
Valuation Remains an Overhang
GE Aerospace is trading at a forward 12-month price-to-earnings (P/E) ratio of 41.45X, higher than the industry average of 35.19X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours.
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In comparison with GE’s valuation, its peers, RTX Corp. and L3Harris Technologies, are trading cheaper. Notably, RTX Corp. and L3Harris Technologies are currently trading at 26.65X and 21.98X, respectively.
Earnings Estimate Revision
The Zacks Consensus Estimate for GE’s 2026 earnings has increased 3.1% to $7.69 per share over the past 60 days, indicating year-over-year growth of 20.7%. The consensus mark for 2027 earnings increased 2% to $8.81 per share, indicating a year-over-year increase of 14.6%.
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Should You Bet on GE Stock Now?
GE Aerospace’s strong foothold and solid momentum in the commercial and defense aerospace markets, driven by solid build rates and a robust defense budget, bode well for growth. However, rising operating expenses, high debt level and premium valuation are limiting this Zacks Rank #3 (Hold) company’s near-term prospects.
While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains and provide a better entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).