GE Aerospace Q2 Earnings Preview: Analysts Expect $1.40 EPS, $9.51 Billion Revenue

GE Aerospace is expected to report Q2 earnings of $1.40 per share and revenue of $9.51 billion, up from $1.20 per share and $8.22 billion in the year-ago period. The company recently announced a multi-year service agreement with China Airlines for GE9X engines on 14 Boeing 777X aircraft. Analysts have raised their price targets for GE Aerospace shares, with RBC Capital boosting its target to $275 and B of A Securities to $230.

GE Aerospace, a subsidiary of General Electric, is set to release its Q2 2025 earnings report on July 17, 2025. Analysts expect the company to report adjusted earnings per share (EPS) of $1.40 and revenue of $9.51 billion, marking a significant increase from the year-ago period [2]. The company recently announced a multi-year service agreement with China Airlines for GE9X engines on 14 Boeing 777X aircraft, further bolstering its market position [2]. Analysts have raised their price targets for GE Aerospace shares, with RBC Capital boosting its target to $275 and B of A Securities to $230 [3].

The market's faith in GE Aerospace's growth story is evident in its stock performance, with shares soaring 43.8% over the past three months to a forward price-to-earnings (P/E) ratio of 43.47x—a level 57% above the aerospace & defense industry average [1]. The company's ability to stabilize production of its LEAP engine—a workhorse for Airbus and Boeing—has been pivotal, with supplier commitments for LEAP parts now exceeding 90%, up from 70% in 2023 [1]. This turnaround has enabled a 17.9% year-over-year revenue growth forecast for Q2 [1].

The real growth engine for GE Aerospace lies in its aftermarket services, which account for over 40% of Commercial Engines & Services (CES) revenue. With a $140 billion backlog and spare parts sales surging 20% in Q1, the segment's operating margin expanded 460 basis points to 23.8% [1]. Analysts expect Q2 aftermarket activity to remain robust, fueled by a growing installed base of LEAP engines and extended maintenance cycles for aging CFM56 engines [1].

GE's commitment to capital returns is unambiguous, with plans to boost dividends by 30% and allocate $7 billion to buybacks in 2025, signaling confidence in its cash flow [1]. This contrasts sharply with peers like Raytheon Technologies (RTX) and Howmet Aerospace, which prioritize M&A over buybacks or trade at a higher P/E but lack GE's diversified portfolio [1].

However, risks remain. Despite margin improvements, GE's Q1 operating expenses rose 12% year-over-year, driven by restructuring costs and inflation. If these costs outpace revenue growth, the 43.47x P/E could look excessive [1]. Supply chain volatility, with delays in securing turbine blades and other components for LEAP engines, also persists [1]. Analysts expect EPS of $1.43, but a miss could trigger a sharp correction [1].

Investment Thesis: Hold for Growth, but Mind the Ceiling

Why Hold?
- Market Share Leadership: GE controls 60% of the narrow-body engine market, with LEAP engines powering 90% of new single-aisle aircraft. This entrenched position ensures recurring aftermarket revenue for decades [1].
- Execution Track Record: The company has beaten earnings estimates for 12 straight quarters, with Q1's 60% EPS beat over expectations underscoring management's operational discipline [1].
- Portfolio Focus: The April 2024 spin-off of Vernova has sharpened focus on aerospace, reducing complexity and freeing cash flow [1].

When to Proceed with Caution?
- Valuation Ceiling: At 43.47x, the stock is vulnerable to profit-taking if growth slows or peers outperform. Investors should consider trimming exposure if the P/E breaches 45x [1].
- Near-Term Catalysts: The Q2 report is a make-or-break moment. Analysts expect EPS of $1.43, but a miss could reset expectations [1].

Final Verdict
GE Aerospace's premium valuation is a bet on its ability to sustain its supply chain recovery, monetize aftermarket dominance, and deliver on its shareholder pledges. While the 43.47x multiple is rich, the company's structural advantages in commercial engines and defense propulsion support a Hold rating for growth-oriented investors. However, with the stock up 43.8% in three months, now is not the time to chase the rally. Wait for a post-earnings pullback or a multiple contraction before adding new positions.

References:
[1] https://www.ainvest.com/news/ge-aerospace-q2-2025-earnings-premium-worth-takeoff-2507/
[2] https://www.ainvest.com/news/ge-aerospace-ge-2025-q2-earnings-preview-upside-potential-driven-supply-chain-improvements-shareholder-returns-2507/
[3] https://www.tradingview.com/news/stockstory:2af545b01094b:0-ge-aerospace-ge-q2-earnings-what-to-expect/