What’s Next For GE Stock After A Solid Q4?

January 23rd, 2026 by Trefis Team
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GE: GE Aerospace logo
GE
GE Aerospace

GE Aerospace (NYSE: GE) reported impressive Q4 2025 results with adjusted EPS of $1.57, beating estimates by 10%, while full-year adjusted EPS reached $6.37. Revenue grew 20% in the quarter to $11.9 billion, driven by 31% services growth and record LEAP engine deliveries exceeding 1,800 units.

But does this strong operational performance justify further upside from current levels? We don’t think there remains significant upside potential from the current levels, given the lofty valuations.

What’s driving the valuation concern? The stock has surged dramatically over the past twelve months (+47%), pushing the valuation to stretched levels. With full-year 2025 adjusted EPS of $6.38 and shares trading around $295, GE Aerospace is commanding a P/E multiple of 46x. This represents a significant premium to historical averages and raises questions about how much more the market is willing to pay for future growth.

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Image by Michael Schwarzenberger from Pixabay

How did the business perform operationally?

The quarter showcased robust momentum across key metrics. Total orders surged 74% to $27.0 billion, reflecting strong demand in both commercial and defense segments. Operating profit climbed 14% to $2.3 billion, though operating margins contracted 90 basis points to 19.2% as the company invested in ramping production. Free cash flow reached $1.8 billion, up 15%, demonstrating solid cash generation capabilities. Look at GE Aerospace’s financials for more details.

Segment Performance Highlights

  • Commercial Engines & Services: The CES segment delivered the strongest performance with orders up 76%. Services revenue jumped 31%, with internal shop visit revenue up 30% and spare parts up over 25%. Equipment revenue grew 7% despite unit volume surging 40%, as a lower spare engine ratio offset volume gains. This segment continues to benefit from the installed base expansion and higher utilization rates.
  • Defense & Propulsion Technologies: DPT showed steady progress with orders up 61% and revenue advancing 13%. Operating profit increased 5% to $0.3 billion as the defense business grew 2% while Propulsion & Additive Technologies accelerated 33%. The diversification across defense platforms provides stability even as commercial aerospace dominates the growth narrative.

What does 2026 guidance indicate?

Management provided 2026 guidance projecting adjusted EPS in the range of $7.10-$7.40, suggesting roughly 14% growth at the midpoint. While this represents continued expansion, the deceleration from 2025’s 38% EPS growth raises questions about whether the premium valuation can be sustained. Free cash flow is expected to remain strong, supporting shareholder returns and balance sheet flexibility.

Valuation Crossroads

Can the stock justify its current multiple?

Here’s where the investment debate becomes challenging. At 46.2x trailing earnings, GE Aerospace trades well above typical aerospace and defense peers. Even using the midpoint of 2026 guidance ($7.25 per share), the forward P/E remains elevated at approximately 40.7x. The current trailing P/E ratio is already above the last three-year average of 40.2x. The market appears to be pricing in flawless execution and sustained double-digit growth for years to come. We currently estimate GE stock valuation to be $315 per share, implying limited upside potential. We will soon update our model to reflect the latest quarterly earnings and guidance.

What are the downside risks?

The counterargument centers on limited upside given the valuation starting point. If economic growth slows or airline capacity additions moderate, service demand could soften from elevated levels. Supply chain disruptions remain a persistent risk that could constrain production ramps and pressure margins. Perhaps most critically, any disappointment relative to lofty expectations could trigger multiple compression, given how much optimism is already embedded in the current share price.

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The bottom line

While GE Aerospace’s operational execution remains strong and the long-term aerospace recovery story stays intact, the risk-reward appears asymmetric at current levels. The 46.2x P/E multiple leaves little room for error, and investors may be better served waiting for a more attractive entry point rather than chasing momentum after the substantial rally. The company’s fundamentals are solid, but valuations matter, and this one looks stretched.

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