Should You Pay Attention To GE Aerospace Stock’s Momentum?
GE Aerospace (GE) stock is at an interesting point right now. It has strong momentum, and if you bet on it, you are betting on a company with strong margin, good cash flow, low-debt capital structure, and good tailwinds. But is that enough?
Why Bet On GE Now?
The core long thesis rests on GE’s ability to monetize its massive and growing installed base of commercial engines, particularly the CFM LEAP. As these newer engines mature, they will enter highly profitable maintenance, repair, and overhaul (MRO) cycles under long-term service agreements (LTSAs), driving a favorable mix shift towards high-margin, recurring services revenue.
- Commercial Engines & Services (CES) revenue grew 24% in 2025, with the highly profitable services component growing even faster at 26%.
- A massive backlog of approximately $190 billion provides exceptional multi-year revenue visibility, de-risking the near-term outlook.
- The installed base includes over 45,000 commercial engines, providing a large and resilient foundation for recurring service revenue.
- The book-to-bill ratio was a very strong 2.3x in the latest quarter, indicating that demand and backlog are still accelerating.
How Do The Fundamentals Look?
- Long-Term Profitability: About 14.4% operating cash flow margin and 15.5% operating margin last 3-year average.
- Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
- Revenue Growth: GE Aerospace saw revenue growth of 18.5% LTM and 18.3% last 3-year average, but this is not a growth story
- Room To Run: Despite its momentum, GE stock is trading 0.8% below its 52-week high.
Below is a quick comparison of GE fundamentals with S&P medians.
| GE | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Aerospace & Defense | – |
| PS Ratio | 7.9 | 3.4 |
| PE Ratio | 41.4 | 25.0 |
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|
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| LTM* Revenue Growth | 18.5% | 6.4% |
| 3Y Average Annual Revenue Growth | 18.3% | 5.4% |
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| LTM* Operating Margin | 18.9% | 18.8% |
| 3Y Average Operating Margin | 15.5% | 18.2% |
| LTM* Op Cash Flow Margin | 18.6% | 20.7% |
| 3Y Average Op Cash Flow Margin | 14.4% | 20.2% |
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| DE Ratio | 5.7% | 20.2% |
*LTM: Last Twelve Months
The Bear View & The Current Investment Debate
The current investment debate on GEis centered around: Can GE’s massive ~$190B backlog and services strength overcome guided growth deceleration, margin pressure, and mounting operational risks (supply chain, engine durability) in the near term?
The prevailing sentiment is bearish. The fortress balance sheet and backlog are being overshadowed. Official guidance points to a material growth slowdown. Core CES margins are compressing. And new regulatory risk on the flagship LEAP engine creates significant uncertainty.
| Bull View | Bear View |
|---|---|
| The record backlog and accelerating high-margin services revenue (+31% YoY) provide exceptional multi-year earnings visibility that outweighs any temporary operational headwinds. | FY26 guidance for ‘low double-digit’ growth is a major deceleration from 18% in FY25. This, plus CES margin contraction and new regulatory scrutiny, signals a negative inflection. |
You can evaluate more on which view to bet on by visiting GE Investment Highlights & Full Analysis
GE Is Just One of Several Such Stocks
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We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- High operating or (cash flow from operations) margins
- Low-debt capital structure
- Strong momentum
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:
- Average 12-month forward returns of nearly 15%
- 12-month win rate (percentage of picks returning positive) of about 60%
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