GE Aerospace (GE) 25Q3 Update

25Q3 revenue was $12.2 billion, up 23.8% over 24Q3.  Commercial Engine & Services (CES) revenue rose 26.8%, while Defense & Propulsion Technologies (DPT) was up 26.1%.  CES segment profit jumped 26.1%, with a 170 bp rise in margin to 27.4%.  DPT segment profit surged 75.5%, with margin up 390 bp to 13.7%.  Other income fell from $1.0 billion to $285 million, mostly on the non-repeat of certain gains on asset sales.  Thus, 25Q3 net income was $2.16 billion, up from $2.10 billion.  GAAP EPS was $2.04, up from $1.56, on a lower share count.  Adjusted EPS was $1.66, up from $1.15, exceeding my estimate of $1.35 and the consensus estimate of $1.47.

Services gains drove profitability.  There is pent-up demand for engine maintenance, repairs and overhauls, as air passenger traffic continues to rise.  Sales of parts are benefiting from growth in external shop visits.  Increasing work scopes are driving greater revenues per shop visit.  Sales of equipment are also rising rapidly, with LEAP engine sales up 40% in the quarter, but profit margins on the LEAP are low and even negative.  It seems unlikely that growth in services can continue at this high double-digit pace for very long, given the challenges facing the global economy.

Management’s guidance now anticipates low double-digit adjusted revenue growth (i.e. excluding run-off insurance operations) in the high-teens, up from the mid-teens previously; operating profit of $8.65-$8.85 billion, up from $8.2-$8.5 billion; adjusted EPS of $6.00-$6.20, up from $5.60-$5.80; and FCF of $7.1-$7.3 billion, up from $6.5-$6.9 billion.  The increases reflect primarily the strong 25Q3 results with no lift to its implied guidance for 25Q4.

My projections now show adjusted revenue growth of 19.8% (up from 15.8%), operating profit of $8.7 billion (up from $8.4 billion previously), GAAP EPS of $7.23 (up from $6.75), adjusted (non-GAAP) EPS of $6.09 (up from $5.80) and FCF of $7.1 billion, up from $6.8 billion.  For 2026, I anticipate adjusted revenue growth of 8.4% (from 7.7%); GAAP EPS of $7.78 (from $7.48); non-GAAP EPS of $6.75 (from $6.45); and FCF of $7.6 billion (from $7.0 billion).

Since my last report on July 21, GE’s stock has advanced 8.2% on a total return basis, slightly underperforming the S&P 500’s 9.5% gain.  The stock is now valued at 36 times my 2026 GAAP EPS estimate and 42 times 2026 non-GAAP EPS.  It is also valued at 33.8 times management’s 2028 adjusted EPS guidance of $8.40.  Based my 2026 revised projections, I am raising my price target from $205.00 to $215.00.  That equates to a potential total return of –23.8%.  Thus, I am maintaining my performance rating of “5” (Sell).

As noted, management’s guidance essentially leaves its original expectations for 25Q4 unchanged, suggesting perhaps then it is once again setting a low bar for the upcoming quarter.  Even so, the stock’s valuation does not seem justified over the long haul, given GE’s exposure to the business cycle and potential geopolitical events, both of which could reduce air travel demand, and with it demand for new engines and maintenance services.

This is a summary of my recent report on GE Aerospace (GE). To obtain a copy of the report, please reach out to me using the contact information provided below.

December 9, 2025 (Report published on December 7, 2025.)

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com

© 2015-2026 by Stephen P. Percoco, Lark Research.   All rights reserved.

This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.