Buy Or Sell GE Aerospace Stock?

Let’s start with the obvious question: after soaring 86% in the last twelve months and touching the $320 level, is GE stock still a good buy?

On the surface, the company looks unstoppable. GE Aerospace has capitalized brilliantly on the commercial aviation recovery, driven by strong demand for its LEAP, GEnx, and GE9X engines, more air traffic, and robust aftermarket services. Add to that a recent U.S. Navy contract for eight LM2500 engines, which reaffirms its leadership in marine propulsion — and you’ve got serious momentum.

So yes, the operational story is solid. But the real question is: does the current price still make sense? We don’t think so.

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How Does GE’s Valuation Stack Up?

Here’s where things get interesting. When we compare GE to the broader S&P 500, the stock starts to look expensive — very expensive.

• Price-to-Sales (P/S): 7.7 vs. 3.3 for S&P 500
• Price-to-Free Cash Flow (P/FCF): 52.8 vs. 20.8
• Price-to-Earnings (P/E): 42.2 vs. 23.7

So why the premium? Investors are paying up for perceived quality and growth resilience. But at these multiples, the valuation leaves little room for upside in the near term. Look at GE Stock Valuation Ratios for more details.

What About Growth Momentum?

Now let’s see if GE’s growth justifies the premium.

It’s true — GE Aerospace has delivered outstanding top-line growth.

• Over the last three years, revenues rose at an average rate of 15.7%, far outpacing the S&P 500’s 5.6%.
• In the past twelve months alone, revenue climbed 17.7%, reaching $44 billion.
• The most recent quarter saw 23.8% year-over-year growth, more than triple the S&P 500’s pace.

That’s impressive execution, signaling real demand strength and competitive edge.

Is Profitability Keeping Up With Growth?

Profitability tells a more balanced story. GE Aerospace’s margins are healthy but not dramatically ahead of peers.

• Operating Margin: 20.5% (vs. 18.8% for S&P 500)
• Operating Cash Flow Margin: 17.2% (below 20.5% for S&P 500)
• Net Income Margin: 18.3% (ahead of 13.1% for S&P 500)

So, margins are solid, but not exceptional enough to justify a giant valuation gap.

How Stable Is GE Financially?

If you’re worried about debt, GE Aerospace looks exceptionally safe.

• Debt: $21 billion vs. a $339 billion market cap — a lean Debt-to-Equity Ratio of 6.1%, far below the S&P 500’s 20.4%.
• Cash: $14 billion, yielding a Cash-to-Assets Ratio of 10.5%, again stronger than the market average.

This financial strength gives GE flexibility — it can weather volatility and still fund growth or buybacks without strain.

But What Happens in a Downturn?

Here’s the catch. GE doesn’t shine in market downturns. Historically, it’s been more volatile than the S&P 500.

• In the 2022 inflation shock, GE fell 46.8% vs. the market’s 25.4%.
• During COVID-19, the drop was 58.3% vs. 33.9% for the index.
• Even back in the 2008 financial crisis, the decline was 84.2% — far steeper than the 56.8% market drop.

Although it has recovered impressively every time, the pattern shows that GE stock tends to swing harder during crises — suggesting weaker downside resilience. Look at How Low Can GE Stock Really Go for more details.

So, Should You Buy GE at $320?

Here’s the bottom line: GE Aerospace is operationally strong, no doubt about it.

Its growth momentum is robust, profitability is sound, and financial stability is rock-solid. However, its downturn resilience is weak, and its valuation is stretched by almost every measure.

So, while the company is solid, the stock looks richly priced at current levels. For long-term investors, GE remains a high-quality name — but for new buyers, the current price likely offers limited upside in the near to mid-term.

We could be wrong, of course; investors may continue to assign a premium to GE stock given its recent contract wins and the ongoing optimism surrounding the commercial aviation recovery. Remember, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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