GE Aerospace reported robust second-quarter earnings for 2024, significantly surpassing analyst expectations. The company posted earnings of $1.20 per share, which was $0.21 higher than the consensus estimate of $0.99. Additionally, revenues rose 3.9% year-over-year to $9.09 billion, well above the $8.44 billion consensus forecast. Adjusted revenues, excluding insurance revenues, were $8.22 billion compared to $7.91 billion in the same period last year.
The strong performance was highlighted by GE Aerospace Chairman and CEO H. Lawrence Culp, Jr., who noted double-digit increases across orders, operating profit, and free cash flow. The company saw total orders surge by 18% to $11.2 billion, driven by robust demand in both commercial and defense segments. Notably, commercial engines and services revenue increased by 6.9% to $6.13 billion, while defense revenue rose by 1.1%.
Investors want to see if these results are strong enough to break the stock out above the $170 level which has acted as resistance over the past two months. The stock trades at 32x forward earnings so it is expensive. The ability for investors to break this out would speak volumes about the current rotation trade.
GE Aerospace provided updated guidance for FY24, reflecting the positive momentum from the first half of the year. The company now expects adjusted EPS to range between $3.95 and $4.20, up from the previous guidance of $3.80 to $4.05. This is in line with the consensus of $4.07. The company also raised its free cash flow guidance to $5.3 billion to $5.6 billion, compared to the prior forecast of more than $5 billion.
Free cash flow was a standout metric for GE Aerospace, increasing by nearly 17% to $1.1 billion in Q2, surpassing the estimated $967.5 million. This growth underscores the company's efficient cash management and strong operational performance. The operating profit also saw a substantial increase, with adjusted operating profit up 37% to $1.9 billion, and operating profit margins expanding by 560 basis points to 23.1%.
The company's strategic initiatives to address supply chain constraints have shown positive results. GE Aerospace has deployed over 550 engineering and supply chain resources to key supplier sites, which has led to significant progress in addressing material input shortages. This is expected to support increased engine deliveries and shop visits in the second half of the year, further bolstering revenue growth.
Overall, GE Aerospace's Q2 performance has positioned it well for the remainder of 2024. The company's strong order book, improved operational efficiencies, and strategic focus on supply chain management are expected to drive continued profit and free cash flow growth. The positive earnings report and raised guidance reflect GE Aerospace's resilience and strategic execution in a challenging market environment.
The market reacted positively to the earnings report, with GE Aerospace shares rising 3.1% in early trading. This uptick indicates investor confidence in the company's ability to sustain its growth trajectory and deliver strong financial performance through the rest of the year.