GE Soars Past Estimates: $175B Backlog, New EPS Target Sends Wall Street Spinning

GE Aerospace delivered a blowout second quarter, beating Wall Street expectations across the board and raising its guidance for both the full year and longer-term financial targets. Against a backdrop of solid global demand for commercial aviation and improving supply chain conditions, the company posted robust growth in earnings, revenue, and free cash flow. Investors and analysts alike welcomed the strong performance, which was fueled by surging demand for commercial jet engines and services, improving defense orders, and continued traction in operational efficiency. The company's updated guidance projects adjusted EPS of $5.60 to $5.80 for 2025, up from its prior view of $5.10 to $5.45, and a 2028 target of $8.40. Operating profit is expected to climb to $8.2 to $8.5 billion this year, and $11.5 billion by 2028, with revenue growing at a double-digit CAGR over the period.

In Q2 2025, GE Aerospace reported adjusted EPS of $1.66, well ahead of the consensus estimate of $1.43, and revenue of $10.2 billion, which also topped the $9.6 billion forecast. Operating profit rose to $2.3 billion, up sharply from $1.9 billion a year ago. On a reported basis, net income was $2.03 billion, or $1.87 per share, compared to $1.15 per share in the prior-year period. Free cash flow nearly doubled year-over-year to $2.1 billion. Orders were equally strong, up 27% YoY, supported by 28% growth in commercial engine and service orders and 24% growth in defense and propulsion technologies.

Commercial services were a standout, with revenue growing 29% and operating profit margin expanding to 23%. Demand for the LEAP engine remained a key growth driver, with 975 units shipped during the quarter, up from 825 a year earlier. The commercial engine install base now exceeds 42,700 units. Defense was also strong, with military engine deliveries up 14% year-over-year. GE cited notable wins on key programs like the F-35 and B-52, highlighting the company's strong positioning across both commercial and military aviation. Supply chain conditions also showed signs of normalization, with parts availability improving 15% year-over-year and labor constraints easing.

CEO Larry Culp credited operational focus and robust end-market demand for the blowout quarter, noting that the company is executing on its backlog and optimizing cost structure. Culp emphasized the role of FLIGHT DECK, GE’s operational framework, in improving safety, quality, delivery, and cost efficiency. The company ended the quarter with a record $175 billion backlog, including $90 billion in commercial services, reinforcing its long-term growth visibility.

The company also updated its long-term outlook, now targeting adjusted EPS of $8.40 in 2028, up from previous guidance of $8.00, and projecting $11.5 billion in operating profit, versus $10 billion previously. These increases reflect sustained strength in the commercial aftermarket, durability improvements in engines, and a clearer trajectory for defense programs. Sales growth is now expected to expand at a double-digit CAGR from 2024 through 2028, compared to the prior view of high-single-digit growth.

Capital return remains a growing focus. GE Aerospace plans to return approximately $24 billion to shareholders between 2024 and 2026, up 20% from its previous plan. This includes a $19 billion share buyback authorization, pending board approval. After 2026, the company expects to return at least 70% of free cash flow to shareholders via dividends and repurchases, a signal of confidence in sustained cash generation.

One of the key macro challenges for GE Aerospace remains the evolving tariff landscape. CEO Culp told Reuters the company has a slightly more positive view of parts and engine sales to China compared to April, but acknowledged that tariffs continue to create cost headwinds. While GE is working to mitigate these costs—including engaging in discussions with airlines and exploring government advocacy for tariff relief—Culp conceded, "We can't offset all of the tariff pressure ourselves". The company sees the potential for future trade agreements to follow the U.S.-U.K. template, which could offer some relief. In the near term, management remains confident that aircraft departures globally will climb by a low single-digit percentage this year, helping to sustain demand for its installed base.

Despite external challenges, GE Aerospace appears to be on a glide path to sustained outperformance. The sharp increases in its 2025 and 2028 financial targets show a management team leaning into strong sector demand and converting it into higher-margin execution. With free cash flow, earnings, and profitability all moving higher, and a substantial capital return program now in motion, GE is once again flying high—this time without the burden of its former conglomerate structure.

WATCH: “The worst thing you can do is keep doing what works.”