25Q1 revenue was $9.9 billion, up 10% over 24Q1. Commercial Engine & Services (CES) revenue rose 14.4%, while Defense & Propulsion Technologies (DPT) was essentially flat. CES segment profit jumped 36%, with a 420 bp rise in margin to 27.5%. DPT segment profit rose 16%, as margin rose 160 bp to 12.7%. Insurance profit was up 0.5% to $205 million. Excluding insurance, corporate & other costs declined from $203 million of costs to $167 million.
Thus, 25Q1 net income was $1.98 billion, up from 24Q1’s $1.54 billion. GAAP EPS was $1.83, up from $1.58, and exceeded my estimate of $1.21. Adjusted EPS was $1.49, up from $0.93 and beat my estimate of $1.09.
The company is taking actions to offset the impact of tariffs, including optimizing its operations and leveraging existing programs and strategies. It is also tightening controls on SG&A and raising prices wherever possible. So far, the impact of tariffs has been muted. A 10% decline in equipment orders in CES was more than offset by a 30% rise in services orders. In DPT, an 11% drop in equipment orders was exactly offset by a 15.4% rise in services orders.
While 25Q1 results exceeded management’s expectations, it has left its full year 2025 guidance unchanged. It anticipates low double-digit adjusted revenue growth (i.e. excluding run-off insurance operations); operating profit of $7.8-$8.2 billion, up 9.6% YOY at the midpoint; adjusted EPS of $5.10-$5.45 and FCF of $6.3-$6.8 billion, up from $6.1 billion. My projections remain in line with that guidance. They anticipate adjusted revenue growth of 12.6%, operating profit of $7.9 billion, GAAP EPS of $6.19, adjusted (non-GAAP) EPS of $5.40 and free cash flow of $6.7 billion. For 2026, I anticipate that GE’s adjusted revenue growth will slow to 6.9% (from 9.7% in my previous report). With further modest margin expansion, my model shows 2026 GAAP EPS of $6.88, up 11% from 2025, non-GAAP EPS of $6.10, up 13.0%, and free cash flow of $6.3 billion, down 6%.
Since my last report on February 22, GE’s stock is down 5.2% on a total return basis, better than the S&P 500’s 11.9% decline. Owing to its high valuation multiple (compared with the broader market), the stock has underperformed when the market sell-off has been steep, but it has outperformed at other times. Based upon management’s guidance and my 2026 projections, I am maintaining my price target of $200.00. That equates to a potential total return of 6.5%. Thus, I am also maintaining my performance rating of “3” (Neutral).
Near-term growth prospects look solid, owing in large part to its strong backlog, but the stock’s high forward multiple 27.5 times projected 2026 GAAP EPS and 31.0 times adjusted (non-GAAP) EPS implies market expectations of low- to mid-teens earnings growth beyond the forecast period. Given the higher probability of a slowdown in global economic activity as well as ongoing geopolitical risks, this imbedded long term earnings growth forecast looks optimistic.
This is a summary of Lark Research’s update report on GE Aerospace (GE). To obtain a copy of the report, please reach out to Steve Percoco using the contact information provided below.
June 20, 2025 (Report published on April 22, 2025.)
Stephen P. Percoco
Lark Research
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© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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