GE Aerospace vs. Textron: Which Aerospace & Defense Stock Should You Bet On?

GE Aerospace GE and Textron Inc. TXT are two familiar names operating in the aerospace and defense industry. As rivals, both companies are engaged in producing highly engineered aircraft components for commercial and military aircraft in the United States and internationally.

These companies have been enjoying significant growth opportunities in the aerospace and defense space on account of the improving air traffic trend and the expansionary U.S. defense budgetary policy in the past couple of years. Let’s take a closer look at their fundamentals, growth prospects and challenges.

The Case for GE Aerospace

GE Aerospace is poised to gain from its growing installed base and higher utilization of engine platforms, supported by strength across commercial & defense sectors. Solid demand for LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is proving beneficial for the Commercial Engines & Services business. During 2025, the company secured more than 500 engine wins at the Dubai Airshow, including deals from flydubai for GEnx engines and Riyadh Air for LEAP-1A engines.

Growing popularity for the company’s propulsion & additive technologies, critical aircraft systems and aftermarket services in the defense sector is driving the Defense & Propulsion Technologies business’ performance. In 2025, the company secured a $5 billion contract from the U.S. Air Force to supply F110 engines, parts and support services as part of a Foreign Military Sales (FMS) program. With rising U.S. & international defense budgets, heightened geopolitical tensions and positive airline & airframer dynamics, GE Aerospace is expected to maintain solid momentum in the quarters ahead.

GE Aerospace remains committed to making investments to boost growth and provide better services to its customers. The company has been on track to invest more than $1 billion in its MRO facilities around the world over the next five years. This includes the acquisition of a dedicated LEAP test cell and expanding several MRO facilities. Also, in 2026, the company plans to invest an additional $1 billion in U.S. manufacturing and technology facilities.

The company also remains focused on rewarding its shareholders through dividends and share buybacks. In 2025, the company paid dividends of $1.45 billion (up 44.1% year over year) to its shareholders and repurchased shares worth $7.4 billion. GE also raised its dividend by 30.6% to 36 cents per share in February 2026. After the first quarter of 2026, share repurchases will be made under a new $20 billion authorization approved in December 2025.

The Case for Textron

Growth in commercial air passenger traffic has been benefiting Textron’s Aviation business unit. Strong fleet utilization, backed by improving commercial air travel, contributed to Textron Aviation unit’s revenue growth of 16.2% on a year-over-year basis in 2025. Textron has also been witnessing strong order activity, which resulted in a backlog of $7.72 billion for its Aviation segment. Such a robust backlog count strengthens Textron’s revenue-generating capacity in the coming quarters.

Besides its strong presence in the commercial aerospace market, Textron enjoys solid demand for its defense products as well. To this end, it is imperative to mention that in the fourth quarter of 2025, the company signed a contract to deliver the first two Beechcraft T-6 to Japan's Air Self-Defense Force. The company also signed Letters of Intent to identify and evaluate areas for cooperation with Ukraine.

Meanwhile, the Bell segment is advancing the V-280 Valor under the U.S. Army’s Future Long Range Assault Aircraft program, part of the Future Vertical Lift initiative, with a critical design review underway and the first prototype flight planned for 2026. With increasing U.S. defense spending and continued progress on key programs and contract wins, these efforts are expected to strengthen Textron’s future operating performance.

The company’s cash and cash equivalents amounted to $2.03 billion at the end of 2025. While Textron’s long-term debt totaled $3.87 billion as of Dec. 31, 2025, its current debt was $0.01 billion. Although the long-term debt value is higher than its cash reserve, its current debt remains much lower than the cash balance. So, it seems that the company boasts a solid solvency position, at least in the short term.

However, persistence of supply-chain issues arising out of component shortages and delays is expected to result in production delays for some of Textron’s products. Also, TXT may continue to experience cost increases for certain materials and components, which, along with increased energy and shipping costs and other inflationary pressures, may continue to adversely impact its profitability.

Also, if labor shortages continue in the near term, aircraft manufacturers like Textron may face challenges in the timely delivery of their finished products, amid ramped-up jet production rates, which, in turn, may impact their operating results.

Price Performance

In the past year, GE Aerospace shares have risen 42.8%, while Textron stock has gained 21.3%.

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The Zacks Consensus Estimate for GE & Textron

The Zacks Consensus Estimate for GE’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 14% and 16.8%, respectively. EPS estimates for both 2026 and 2027 have increased over the past 60 days.

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The Zacks Consensus Estimate for Textron’s 2026 sales and EPS implies year-over-year growth of 4.7% and 7.4%, respectively. Although the EPS estimates for 2026 have declined over the past 60 days, the same for 2027 have increased.

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Valuation of GE & Textron

Textron is trading at a forward 12-month price-to-earnings ratio of 13.20X, close to its median of 13.06X over the last three years. GE’s forward earnings multiple sits at 37.89X, higher than its median of 36.60X over the same time frame.

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Conclusion

GE Aerospace’s persistent strength in the commercial and defense aerospace markets, driven by solid build rates, wide-body aircraft demand and robust defense budget, bodes well for growth. Given the strength across most of its served markets, GE has built a sound liquidity position that supports its shareholder-friendly policies.

In contrast, Textron’s solid momentum in commercial and defense aerospace markets, along with its robust pipeline of projects, favors well for its growth. Strong liquidity position for the short run is an added strength. However, this has been marred by the supply-chain challenges arising from component shortages, which might affect its near-term performance.

Despite its steeper valuation, GE holds robust prospects due to strong estimates, stock price appreciation and better prospects for sales and profit growth. Given these factors, GE seems a better pick for investors than Textron currently. While GE carries a Zacks Rank #2 (Buy), Textron currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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