GE Aerospace Closes On Buy Point As Aerospace/Defense Stocks Rally

The aerospace and defense sector is experiencing a significant rally, and GE Aerospace is at the forefront of this surge. The company's recent financial performance, particularly its strong fourth-quarter results and optimistic outlook for 2025, has captured the attention of investors and analysts alike. With robust demand for its services and products, GE Aerospace is poised for substantial growth, making it an attractive buy for those looking to capitalize on the sector's momentum.

GE Aerospace's fourth-quarter results were nothing short of impressive. The company reported a total revenue (GAAP) of $10.8 billion, a 14% increase from the previous year, and an adjusted revenue of $9.9 billion, up 16%. Profit (GAAP) soared to $2.3 billion, a 37% increase, with an operating profit of $2.0 billion, up 49%. The profit margin (GAAP) expanded to 21.2%, an increase of 350 basis points, while the operating profit margin reached 20.1%, up 450 basis points. Continuing EPS (GAAP) was $1.75, a 62% increase, and adjusted EPS was $1.32, up 103%. Cash from Operating Activities (GAAP) was $1.3 billion, a 5% increase, and free cash flow was $1.5 billion, up 21%.

These strong financial results reflect the robust demand for GE Aerospace's services and products. The company's fourth-quarter orders surged by 46%, and EPS more than doubled. This performance capped off a monumental first year as a standalone company, with $1.7 billion of profit growth and $1.3 billion of free cash flow growth. Looking ahead to 2025, GE Aerospace expects double-digit revenue and EPS growth with greater than 100% free cash flow conversion, guided by their proprietary lean operating model, FLIGHT DECK.



The company's strategic initiatives are also driving future growth and operational efficiency. One key initiative is the integration of engineering and supply chain teams into a single organization called Technology & Operations, led by Mohamed Ali. This cross-functional team is designed to enable faster problem-solving and increase deliveries by sharing accountability across the full value chain. Another strategic initiative is the use of FLIGHT DECK to address supply chain constraints. Throughout 2024, GE Aerospace drove progress using FLIGHT DECK, enabling a 26% increase in material inputs across priority supplier sites from the first half to the second half of the year. This supported Commercial Engines & Services (CES) services revenue growth of 17% and total engine unit growth of 18% from the first half to the second half.

Additionally, GE Aerospace has focused on inventing the future of flight, as evidenced by their collaboration with Boeing, NASA, and Oak Ridge National Laboratory to develop a hybrid electric propulsion system rated at one megawatt with the U.S. Army. This initiative highlights the company's commitment to innovation and its role in shaping the future of the aviation industry.

The strong financial performance and optimistic outlook for 2025 are likely to boost investor confidence in GE Aerospace and the broader aerospace and defense sector. Analysts are bullish on the company, with all nine analysts tracked by Visible Alpha rating the stock as a "buy." The stock's average price target is $211.67, which is 16% higher than its level of $182.85 entering trading on January 23, 2025. This bullish sentiment is driven by the company's strong financial results, robust demand for its products and services, and its strategic initiatives to address supply chain constraints and increase deliveries.

In summary, GE Aerospace's recent financial performance and expected growth in 2025 are likely to have a positive impact on investor confidence and stock valuation in the aerospace and defense sector. The company's strong financial results, robust demand for its products and services, and strategic initiatives to address supply chain constraints and increase deliveries are all factors that contribute to this positive outlook. As the aerospace and defense sector continues to rally, GE Aerospace is well-positioned to capitalize on this momentum and deliver substantial growth for its investors.