GE Aerospace Stock Looks Strong Despite Valuation Concerns

GE Aerospace stock has traded up 60% YTD, but its Q2 earnings reveal a strengthening investment thesis for long-term investors. The company's commercial aerospace engines have long-term profit potential through recurring revenue from maintenance, repair, and overhaul services. Despite a challenging 2024, GE is on track for 15%-20% growth in deliveries in 2025. LEAP engine deliveries increased 38% YoY in Q2, putting GE back on track for its full-year guidance. The growth in engine deliveries will hold back near-term profits but drive long-term earnings and cash flow.

GE Aerospace (NYSE: GE) stock has seen a significant 60% year-to-date (YTD) increase, but its second-quarter earnings have revealed a strengthening investment thesis for long-term investors. The company's commercial aerospace engines hold long-term profit potential through recurring revenue from maintenance, repair, and overhaul (MRO) services [1][2][3].

Aerospace companies are typically evaluated based on their long-term earnings and cash flow potential rather than near-term earnings. GE's commercial aerospace engines, particularly the LEAP engine used on the Boeing 737 MAX and the Airbus A320neo family, are a key driver of this potential [1][2][3].

The industry model involves selling engines at a loss initially, reflecting long-term development and production costs, known as the negative engine margin. However, these engines can operate for over 40 years, generating lucrative aftermarket revenue through periodic MRO services [1][2][3].

Despite a challenging 2024, GE is on track for 15% to 20% growth in deliveries in 2025. LEAP engine deliveries increased by 38% year over year (YoY) in Q2 to 410 units, following a 13% decline in Q1 to 319 units, putting GE back on track for its full-year guidance [1][2][3].

While this growth will hold back near-term profits, it will drive long-term earnings and cash flow. This is a positive sign that GE is overcoming supply chain issues that negatively impacted deliveries in 2024 [1][2][3].

Should you invest in GE Aerospace right now?

Before making a decision, consider the Motley Fool Stock Advisor's analysis, which identified 10 best stocks for investors to buy now, but GE Aerospace was not among them [1][2][3].

References:
[1] https://finance.yahoo.com/news/think-ge-aerospace-stock-expensive-134026194.html
[2] https://www.fool.com/investing/2025/07/26/think-ge-aerospace-stock-is-expensive-this-chart-m/
[3] https://www.nasdaq.com/articles/think-ge-aerospace-stock-expensive-chart-might-change-your-mind