GE Aerospace Soars Past Expectations, Fueling Stock Breakout

GE Aerospace (GE) delivered a strong fourth-quarter 2024 earnings report, exceeding analyst estimates across the board and providing an optimistic outlook for 2025. This positive news, coupled with increased shareholder returns, propelled the stock to a significant breakout. The results highlighted robust demand for the company's products and services, particularly in the commercial engines and services segment, while also addressing ongoing supply chain challenges.

Q4 Performance: A Clear Beat

GE Aerospace significantly outperformed expectations in the fourth quarter. Adjusted EPS came in at $1.32, more than doubling the $0.65 reported in the same quarter last year and comfortably surpassing the $1.04 consensus estimate. Adjusted revenue also beat expectations, reaching $9.88 billion compared to the anticipated $9.47 billion, representing a 16% year-over-year increase. This marked the best earnings gain in six quarters and the strongest revenue increase in years.

Key metrics further underscored the strong performance. Total orders surged 46% to $15.5 billion, demonstrating robust demand across the company's portfolio. The commercial engines & services (CES) segment saw a remarkable 50% increase in orders, reaching $12.95 billion, and a 19% revenue growth to $7.65 billion, exceeding estimates of $7.35 billion. The defense and propulsion technologies (DPT) segment also performed well, with a 22% order increase to $2.84 billion and a 4% revenue growth to $2.5 billion, slightly above estimates of $2.49 billion. Adjusted free cash flow also beat estimates coming in at $1.52 billion compared to the $1.28 billion expected.

Guidance and Outlook: Continued Growth Ahead

GE Aerospace provided an encouraging outlook for 2025, forecasting adjusted EPS between $5.10 and $5.45, with the midpoint slightly above the consensus estimate of $5.26. The company anticipates low double-digit revenue growth, aligning with FactSet's prediction of approximately 11% sales growth to $38.99 billion.

Specifically, GE Aerospace expects mid-teens revenue growth in the CES segment, driven by low double-digit to mid-teen growth in services and high-teens growth in equipment. The DPT segment is projected to experience mid- to high-single-digit revenue growth.

Capital Return and Shareholder Value

In addition to the strong financial results and positive outlook, GE Aerospace announced significant capital return initiatives. The company plans to increase its dividend by 30%, subject to board approval, and has authorized a $7 billion share repurchase program. These actions demonstrate the company's confidence in its future performance and its commitment to returning value to shareholders.

Price Action and Breakout

The market responded favorably to the earnings release and guidance, with GE stock surging 7.6% in premarket trading, pushing it above a key buy point of $194.80. This breakout is significant, as the stock had previously rebounded from its 200-day moving average and broken a downtrend, signaling renewed bullish momentum. The stock had already advanced nearly 13% in 2025 leading up to the earnings release, indicating strong investor confidence.

Supply Chain Improvements and Future Growth

While supply chain constraints impacted total engine deliveries in the fourth quarter, the company highlighted meaningful improvements in material input from its priority suppliers, particularly in the second half of the year. This improvement supported growth in CES services revenue and total engine units. GE Aerospace CEO Larry Culp expressed optimism about further supply chain improvements in 2025, which is crucial for meeting the strong demand from aircraft manufacturers like Boeing and Airbus.

Conclusion

GE Aerospace's strong fourth-quarter performance, optimistic outlook, and increased shareholder returns have fueled a significant stock breakout. The company is well-positioned to capitalize on robust demand in the commercial and defense aerospace industries, and its focus on operational efficiency and supply chain improvements bodes well for future growth. The market's positive reaction reflects investor confidence in GE Aerospace's ability to execute its strategy and deliver continued value.