GE Aerospace’s GE shares have declined 15% in the past three months against the S&P 500 composite’s growth of 3.2% and the industry’s 14.9% decline. Other industry players, like RTX Corporation RTX and L3Harris Technologies, Inc. LHX, have declined 6% and 18.6%, respectively, over the said time frame.
Price Performance
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Closing at $305.62 yesterday, the stock is trading below its 52-week high of $388.84 but higher than its 52-week low of $268.91. The stock is currently trading below both its 50-day and 200-day moving averages.
Some investors might see this dip as an opportunity to buy GE, considering the vast long-term potential of the aerospace and defense market and the company’s robust project pipeline. However, it would be prudent to assert if it is the right time to invest in the stock. Let’s delve deeper.
Factors Favoring the Company
The strongest driver of GE Aerospace at the moment is the persistent strength in its Commercial Engines & Services segment. Solid demand for GE’s LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is driving the segment’s performance.
In the second quarter of 2026, GE Aerospace’s engine deliveries within this segment increased 26% year over year, indicating better throughput as it works through customer demand. The Commercial Engines & Services segment’s revenues and orders jumped 27% and 18%, respectively, on a year-over-year basis in the quarter.
In the first nine months of 2026, the company secured several major engine orders and service agreements. Among major awards, GE secured GEnx engine orders from United Airlines and Delta Air Lines for their Boeing 787 Dreamliners. It secured LEAP engine orders from American Airlines and Copa Airlines for their narrowbody fleet. GE and Safran’s 50/50 joint venture, CFM International, also clinched an order from BOC Aviation for delivering up to 200 LEAP-1A and 100 LEAP-1B engines.
Solid demand for the company’s propulsion & additive technologies, critical aircraft systems and aftermarket services in the defense sector is driving the Defense & Propulsion Technologies segment’s results. In the second quarter, revenues and orders from the segment were up 16% and 12%, respectively. Revenues from Defense & Systems business increased 12%, with strength in both services and equipment, including unit deliveries rising 7%. Propulsion & Additive Technologies business’ revenues grew 23%, led by Avio Aero.
GE remains committed to rewarding its shareholders through dividends and share buybacks. In the first six months of 2026, GE paid dividends of $873 million and repurchased shares worth $4.2 billion. Also, the company raised its dividend by 30.6% to 36 cents per share in February 2026.
The company now forecasts free cash flow of $8.9-$9.2 billion for 2026, above its earlier projection of $8.0-$8.4 billion. GE Aerospace had also previously outlined plans to raise total shareholder returns by 20% to roughly $24 billion over the 2024-2026 period through a combination of dividend payments and share repurchases.
Despite the positives, rising debt levels remain a concern. Exiting second-quarter 2026, GE’s total borrowings were $19.2 billion. The figure comprised $2 billion of short-term borrowings and $17.2 billion of long-term borrowings. Also, it has been grappling with high costs and operating expenses. In the second quarter, its cost of sales (comprising costs of equipment and services sold) surged 26.7% year over year to $8.7 billion.
GE’s Valuation
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GE Aerospace is trading at a forward 12-month price-to-earnings (P/E) ratio of 34.79X, higher than the industry average of 27.16X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours.
In comparison with GE’s valuation, its peers, RTX Corp. and L3Harris Technologies, are trading cheaper. Notably, RTX and L3Harris Technologies are currently trading at 24.13X and 18.03X, respectively.
Earnings Estimate Revision
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The Zacks Consensus Estimate for GE’s 2026 earnings has increased 0.6% to $7.91 per share over the past 60 days, indicating year-over-year growth of 24.2%. The consensus mark for 2027 earnings also increased 0.6% to $9.04 per share, indicating a year-over-year increase of 14.3%.
Should You Invest in GE Stock Now?
GE Aerospace’s solid foothold and persistent strength in the commercial and defense aerospace markets, driven by solid build rates, strong engine demand and a robust defense budget, bode well for growth. Given the strength in most of its served markets, GE has built a sound liquidity position that supports its shareholder-friendly policies.
Despite its expensive valuation, given the positive analyst sentiment and its growth prospects, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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GE Aerospace (GE): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).