Aerospace and defense companies are still having trouble getting key parts, which is forcing airlines and armed forces to keep older aircraft and vessels in service longer. That is creating more demand for profitable maintenance, repair, and overhaul work.
GE Aerospace (GE) is already benefiting from this trend, recently winning a U.S. Navy logistics contract worth up to $2.87 billion to support 17 F414 engine components through August 2031.
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GE Aerospace is now taking a bigger step to secure its supply of critical parts. On Sept. 8, it announced an $11.75 billion acquisition of Consolidated Precision Products, a supplier it has worked with for 15 years. Consolidated Precision Products makes structural castings and airfoils at more than 20 facilities worldwide.
Investors initially liked the deal, though GE Aerospace's stock remains about 16% below its August high. That makes the transaction worth watching for a company with nearly 80,000 engines in service and the latest-quarter adjusted revenue and EPS growth of 24% and 22%, respectively. Does buying a familiar supplier for nearly $12 billion give GE Aerospace the production control it needs? Let’s find out.
The Numbers Behind GE Aerospace
GE Aerospace sells jet engines for commercial and military aircraft, then earns recurring revenue by servicing those engines and supplying replacement parts. GE stock has risen 15.7% over the past 52 weeks and 6% so far this year.
www.barchart.com The company’s latest results show why investors remain upbeat. Second-quarter orders increased 17% year-over-year (YoY) to $16.5 billion. GAAP revenue rose 21% to $13.35 billion, while adjusted revenue grew 24% to $12.63 billion. GAAP profit increased 17% to $2.80 billion, and adjusted operating profit rose 18% to $2.75 billion. Margins were slightly weaker, however. GAAP profit margin fell 70 basis points to 21.0%, while adjusted operating margin declined 130 basis points to 21.7%.
Cash flow was a clear bright spot. Operating cash flow climbed 39% to $3.26 billion, and free cash flow rose 43% to $3.03 billion. Following the strong quarter, GE Aerospace raised its 2026 outlook. It now expects high-teens adjusted revenue growth, operating profit of $10.55 billion to $10.75 billion, adjusted EPS of $7.65 to $7.85, and free cash flow of $8.9 billion to $9.2 billion. That strong cash position gives GE Aerospace room to put $7 billion of cash toward the Consolidated Precision Products deal, with new debt covering the rest.
Supply-Chain Power Play
GE Aerospace’s proposed $11.75 billion purchase of Consolidated Precision Products is mainly about getting better control of hard-to-source engine parts. The Cleveland-based supplier has worked with GE Aerospace for 15 years and makes structural castings and airfoils at more than 20 facilities worldwide.
These parts are essential for jet-engine production. When they are in short supply, engine deliveries and repair work can slow down while costs rise. GE Aerospace plans to pay $7 billion in cash and finance the rest with new debt. Management expects its FLIGHT DECK system to help increase output, lower costs, and make the deal add to adjusted EPS and free cash flow in its first full year.
The deal also fits with GE Aerospace’s broader spending plans. Earlier this year, the company committed $1 billion to U.S. factories and suppliers for 2026, after making a similar investment last year. More than $275 million will go toward military engine production, $200 million toward CFM LEAP engine output, and over $100 million toward supplier equipment. That makes CPP look like part of a bigger plan to remove supply bottlenecks, not just a one-off acquisition.
The timing matters because demand remains strong. GE Aerospace recently won a U.S. Navy logistics contract worth up to about $2.87 billion through August 2031 for 17 key F414 engine components. Supply shortages are also keeping older aircraft in service longer, which supports more maintenance and repair work. If Consolidated Precision Products can increase output as expected, GE Aerospace should be better positioned to turn that demand into more engine deliveries, service revenue, and cash flow.
Wall Street’s View of GE’s Outlook
GE Aerospace is set to report third-quarter 2026 results on Oct. 20. Analysts expect $2.01 in earnings per share for the September quarter, up 21.08% from $1.66 a year earlier. For all of 2026, Wall Street expects EPS of $7.91, which would be a 24.18% increase from $6.37 in 2025.
Analysts see the Consolidated Precision Products deal as a way for GE Aerospace to protect that growth. Jefferies analyst Sheila Kahyaoglu called it “an impactful move in the Blades & Vanes War Games,” referring to the battle among engine makers to secure supplies of specialized castings. She believes the deal could help GE Aerospace develop new engines faster and make sure its factories have enough parts to meet demand. Jefferies kept its “Buy” rating and set a $455 price target, estimating that the acquisition could add about 1.5% to GE Aerospace’s 2028 EPS forecast.
Deutsche Bank analyst Scott Deuschle also kept a “Buy” rating on July 27 and raised his target to $450 from $387, saying he has more confidence in GE Aerospace’s outlook. Overall, all 22 analysts surveyed rate the stock a consensus “Strong Buy.” Their average price target is $396.73, which suggests about 22% upside from current levels.
www.barchart.com Conclusion
GE’s CPP acquisition looks like a sensible strategic move, even if the $11.75 billion price tag is difficult to ignore. By bringing a long-standing supplier of critical castings in-house, GE is prioritizing production reliability, engine output, and its high-margin aftermarket opportunity at a time when those capabilities are scarce. Still, with earnings momentum intact and Wall Street broadly bullish, GE shares are more likely to trend higher over time, though investors should expect volatility as the company proves the deal’s payoff.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.