GE Aerospace: A Millionaire-Maker Stock in the Making?

In the ever-evolving aerospace industry, one company has emerged as a potential millionaire-maker stock: GE Aerospace. As the aerospace segment of the once-ubiquitous General Electric, GE Aerospace has carved out a niche for itself, boasting a wide moat business and recurring revenue streams that have investors buzzing about its long-term prospects. But is GE Aerospace truly a millionaire-maker stock, or is it just another flash in the pan? Let's delve into the numbers and assess the company's potential.



A Wide Moat Business with Recurring Revenue

GE Aerospace's competitive position in the aerospace industry is characterized by a wide moat business and strong recurring revenue streams, which contribute significantly to its long-term investment prospects. The company manufactures commercial and government jet engines, powering three in four commercial flights and 26,000 defense aircraft. This dominant market position creates a high barrier to entry for competitors, while the complexity and technical expertise required to maintain and service these engines make it difficult for customers to switch to other manufacturers.

Moreover, GE Aerospace generates approximately 70% of its annual revenue from parts and services, including maintenance and repairs to its fleet. This steady, recurring revenue stream provides a stable foundation for the company's financial performance, with each engine in service generating many years of steady revenue as it is overhauled and repaired over its lifespan, which can last for over 40 years.

Financial Performance and Growth Prospects

GE Aerospace's strong competitive position has translated into robust financial performance and growth prospects. In 2024, the company's earnings per share (EPS) grew by 103% on an adjusted basis, indicating a significant improvement in profitability. The company expects double-digit EPS growth in 2025, guided by its FLIGHT DECK lean operating model. Analysts expect the company to grow earnings by 30% annually through 2028, which would support aggressive dividend increases.

GE Aerospace's adjusted revenue grew by 16% in the fourth quarter of 2024 and 10% for the full year. The company's Commercial Engines & Services segment saw orders grow by 38% in 2024, with revenue increasing by 13% and profit expanding by 25%. Management has laid out revenue growth guidance through 2028, starting with high-single-digit growth in 2025 and gradually cooling to high-single-digit growth by 2028.

Investment Conclusion

GE Aerospace's wide moat business, recurring revenue streams, and strong financial performance make a compelling case for its potential as a millionaire-maker stock. However, investors should remain cautious and monitor the company's progress closely. The cyclical nature of the commercial aerospace industry and the potential for geopolitical risks to impact defense spending could pose challenges to the company's growth prospects.

In conclusion, GE Aerospace's strong competitive position, robust financial performance, and growth prospects make it an attractive investment opportunity for long-term investors. As the company continues to execute on its strategic priorities and unlock supply constraints, it is well-positioned to meet the needs of its customers and create exceptional value for shareholders.