GE Aerospace at 37 Times Earnings: The Aftermarket Case
GE Aerospace trades around $314.27 as I write this, 19.2% below the $389 high it touched earlier this year. Revenue grew 18% in fiscal 2025 to $45.9 billion, and the most recent quarter grew 21% year over year to $13.3 billion. A stock sliding while the business accelerates is the tension that makes this one worth sitting with.
General Electric took itself apart in two moves. GE HealthCare separated first, in January 2023. GE Vernova followed in April 2024, and what remained took the name GE Aerospace and kept the original GE ticker, according to the spin-off timeline the company still publishes. My take: the breakup let a strong franchise trade on its own numbers instead of being averaged in with turbines and CT scanners, but at 34.4 times forward earnings the stock already pays for several more years of the growth investors are only now confirming.
Why the engine business waits to profit
GE Aerospace’s biggest program is the LEAP engine, built through the long-running CFM International joint venture with Safran, which powers the current generation of narrow-body jets from both Boeing and Airbus. New engines are typically priced close to cost, sometimes near breakeven, because the real money in this business shows up later: decades of maintenance, repair, and spare-parts work on every engine already flying. That is a version of the razor-and-blade model that recurs across the industrial world, and it means the size of the installed base matters more than any single quarter’s delivery count.
Gross margin was 31.5% in the most recent fiscal year, up from 30.9%. I read that increase as the aftermarket mix doing more of the work relative to new-engine deliveries, though the company does not break the two out cleanly enough for me to put a hard number on the split. That is the one place in this analysis where I am inferring rather than citing a stated figure.
That’s the mechanism. The results follow it closely.
The same logic applies to GE Aerospace’s wide-body programs, the GEnx that powers Boeing’s 787 and the GE9X built for the 777X, both wholly GE programs rather than joint ventures like CFM. Different aircraft, same economics: the aftermarket tail is where the profit lives, and it lengthens every year the fleet keeps flying.
Supply chain is now the real constraint
Demand is not the bottleneck here, capacity is. Total engine deliveries rose 31% in the first half of 2026, and LEAP deliveries specifically rose 41%, enough that GE Aerospace raised its full-year LEAP delivery growth target from roughly 15% to the high teens, according to the company’s second-quarter release. That is a business that could sell more engines than it can currently build.
The strain shows up on the services side too. Spare-parts delinquencies, orders GE has not yet been able to fill on time, grew 20% sequentially in the June quarter, and shop visits for maintenance work came in oversubscribed by roughly 40% relative to the company’s own full-year plan. Management has framed this as a supply problem rather than a demand problem, which lines up with what the order numbers show, but it also means near-term revenue is capped by how fast GE and suppliers like GKN can add capacity, not by how many airlines want engines serviced.
The counterintuitive part: constrained deliveries are not automatically bad for near-term profit, because aftermarket work on the existing fleet keeps compounding regardless of how many new engines ship this quarter. Growth investors sometimes confuse the two, treating a slower delivery number as bad news, when for this specific business it can mean the more profitable half of the model is simply doing more of the work.
None of that stopped guidance from moving higher. GE Aerospace’s 2026 operating profit outlook sits at $9.85 billion to $10.25 billion, raised during the year on stronger commercial execution and aftermarket demand. A supply-constrained growth story is a different animal than a demand-constrained one. It usually resolves in the company’s favor eventually, once capacity catches up, but the timing is out of the company’s full control, and that is worth sitting with before assuming the growth rate holds in a straight line.
Capital return leans on buybacks, not yield
The 0.53% yield undersells how much cash the company is returning. GE Aerospace repurchased $4.2 billion of stock in the first half of 2026 and paid $873 million in dividends, up 26.9% from a year earlier, under a $20 billion buyback authorization approved in December 2025, per the company’s dividend disclosures. Management has talked about roughly $24 billion in total shareholder returns across 2024 through 2026, funded by free cash flow now guided to $8.9 billion to $9.2 billion for the year, above the $8.0 billion to $8.4 billion range the company started with.
That is a business generating more cash than the dividend alone suggests, with buybacks doing more of the work than the 0.53% headline yield implies. Short interest is thin too, at 1.5% of the float, which tells me skepticism about the valuation is not being expressed by shorting the stock. It shows up in the D quant score instead.
Growth accelerated once the breakup settled
The numbers since the split are hard to argue with. Revenue reached $45.9 billion in fiscal 2025, up from $38.7 billion the year before and $35.3 billion the year before that. The June quarter alone brought in $13.3 billion, 21% above the same period last year and 8% above the prior quarter. Operating income was $8.7 billion for the year, a 19% margin, and net income of $8.7 billion compares with $6.6 billion the year before.
None of that growth required a new product line or an acquisition. It came from an installed base that was already there, now reporting cleanly instead of sitting buried inside a conglomerate income statement alongside unrelated debt.
| Metric | Value | Context |
|---|---|---|
| Price | $314.27 | 19.2% below 52-week high of $389 |
| Forward P/E | 34.4 | trailing P/E 37.5 |
| Revenue, FY2025 | $45.9 billion | up from $38.7 billion in FY2024 |
| Quarterly growth | 21% year over year | 8% sequential |
| Operating margin | 19% | EBIT margin 23.6% |
| Price/sales | 6.5 | five-year average 3.4 |
| Analyst target | $411 | 31% above current price |
| Quant score | D | unchanged from the prior quarter |
The re-rating already assumes more upside
Here is the part that gives me pause. The stock trades at 37.5 times trailing earnings and 34.4 times forward estimates, against a price-to-sales ratio of 6.5 today versus a five-year average of 3.4. That is not a small gap. Price to book sits at 18.6, far above where industrial investors are usually comfortable paying, though book value means less for a company whose real asset is a decades-long service relationship with every airline running its engines.
Forward EPS of $9.13 implies 9% growth already built into the current multiple. That is the number that has to keep showing up in future quarters, not just this year’s report.
Compare that to where the stock traded before the split. Price-to-sales averaged 3.4 over the trailing five years, a period that includes the messier, conglomerate-era version of this business, and today’s 6.5 is closer to double that. Some of the re-rating is deserved: a standalone aerospace franchise with a clean balance sheet and no cross-subsidy from a struggling power unit should trade differently than a piece of a sprawling industrial holding company. The question is how much of the gap is deserved and how much is simply optimism extrapolated from two very good years in a row, and I do not think anyone, including GE Aerospace’s own management, can answer that cleanly yet.
A weak quant score against bullish analysts
14 analysts cover GE Aerospace, 93% of them rate it a buy, and the average target of $411 sits 31% above the current price, with the high target at $455 implying 45%. My own quant score for the stock, the kind of rules-based grading I looked at when I reviewed Seeking Alpha’s quant ratings, sits at a D, unchanged from where it was last quarter.
Quant scores tend to punish a stretched valuation even when the underlying business is fine. That is probably what is happening here: a good company at a price that leaves little room for anything to go sideways. Analyst price targets and quant scores rarely disagree this much on the same stock. When they do, I side with the one that is harder to talk yourself into.
I think of this less as a growth story and more as the industrial version of what happened at Cisco, a legacy name that got boring and consistent again and was rewarded slowly for it rather than all at once. GE Aerospace does not carry anything close to the valuation extremes of a stock trading near 337 times earnings, but 6.5 times sales for an engine maker was unthinkable for this business five years ago.
The specific number I would watch next is the spread between aftermarket services growth and new-engine delivery growth over the next two quarters. If that spread narrows because deliveries catch up faster than services keep compounding, the bull case gets simpler and cheaper. If service revenue keeps outrunning deliveries the way it has, 34.4 times forward earnings will look more reasonable in hindsight than it does today.
Where I would be wrong: the real risk to this thesis is a sustained slowdown in narrow-body aircraft utilization, from a demand shock or a fuel-price spike that grounds fleets. That would hit new orders and flight-hour-driven aftermarket revenue at the same time, and a stock already priced for acceleration does not absorb that combination well. It is the scenario I would need to see evidence against before adding to a position at this multiple, and it is the one place where I think the market’s 93% buy-rating consensus is underpricing how much of the good news is already reflected in the share price.
Analysis and opinion only, not investment advice. Figures come from GE Aerospace’s filings on SEC EDGAR and its investor site; valuation multiples are approximate and were checked on September 23, 2026.
Sources: Dividends (SEC Investor.gov glossary) (https://www.investor.gov/introduction-investing/investing-basics/glossary/dividend) · Dividends tax topic (IRS) (https://www.irs.gov/taxtopics/tc404)