GE Aerospace Rises 12.2% in Six Months: How Should You Play the Stock?

GE Aerospace’s GE shares have gained 12.2% in the past six months, outpacing the S&P 500 composite’s growth of 9% and the industry’s 4.9% decline. Shares of the leading designer and producer of jet engines have also outperformed other industry players like General Dynamics Corporation GD and Textron Inc. TXT, which have returned 6.7% and 7.5%, respectively, over the said time frame.GE Outperforms the Industry, S&P 500 & PeersImage Source: Zacks Investment ResearchClosing at $335.30 on Friday, the stock is trading below its 52-week high of $348.48 but significantly higher than its 52-week low of $232.24. Also, the stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.GE Shares’ 50-Day and 200-Day SMAImage Source: Zacks Investment ResearchWhat’s Behind GE Stock’s Momentum?The strongest driver of GE Aerospace at the moment is the persistent strength in its Commercial Engines & Services business. Solid demand for GE’s LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is driving business’ performance. In first-quarter 2026, the company received orders for more than 650 commercial engines, including commitments from American Airlines, United Airlines and Delta Airlines. It also entered into a long-term materials agreement to support Ryanair’s fleet of about 2,000 CFM56 and LEAP engines.In the first quarter, the company highlighted its progress under the FLIGHT DECK lean model, including supplier improvements that contributed to the commercial Engines & Services business’ revenues. GE’s total engine deliveries increased 43% from the prior-year quarter, indicating better throughput as it works through customer demand. The Commercial Engines & Services business’ revenues and orders jumped 34% and 93%, respectively, on a year-over-year basis in the first quarter.Growing popularity of 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 first-quarter 2026, it clinched a $1.4 billion deal for T408 engines to support the U.S. Marine Corps’ CH-53K helicopter fleet.GE also secured a deal from Boeing Defence UK for the extension of support services for T700-GE-T701D engines. In the first quarter, the Defense & Propulsion Technologies business’ revenues increased 19% year over year and orders grew 67% in the year. Driven by business strength, GE Aerospace expects total revenues (on an adjusted basis) to increase in the low-double-digit range in 2026.The company’s commitment to rewarding its shareholders through dividends and share buybacks is also encouraging.  In first-quarter 2026, it repurchased shares for $2.2 billion. In the same period, the company paid dividends of $381 million, up 26.2% year over year, to its shareholders.Near-Term Concerns PrevailDespite the positives, GE has been grappling with high costs and operating expenses. In the first quarter, its cost of sales surged 32% year over year to $7.9 billion, while selling, general and administrative expenses increased 23.9% to $1.08 billion. Research and development expenses also rose 22.6% to $440 million. In the quarter, GE’s operating profit margin contracted 200 basis points to 21.8%.Also, the rising debt level has been concerning for the company. Exiting the first quarter, GE Aerospace’s total borrowings were $20.3 billion. The figure comprised of $2.1 billion of short-term borrowings and $18.2 billion of long-term borrowings.Valuation Remains an OverhangGE Aerospace is trading at a forward 12-month price-to-earnings (P/E) ratio of 41.81X, higher than the industry average of 32.71X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours.Image Source: Zacks Investment ResearchIn comparison with GE’s valuation, its peers, General Dynamics and Textron, are trading cheaper. Notably, General Dynamics and Textron are currently trading at 20.76X and 13.39X, respectively.Earnings Estimate RevisionThe Zacks Consensus Estimate for GE’s 2026 earnings has inched up 0.7% to $7.48 per share over the past 60 days, indicating year-over-year growth of 17.4%. The consensus mark for 2027 earnings increased 0.6% to $8.67 per share, indicating a year-over-year increase of 15.9%.Image Source: Zacks Investment ResearchFinal Take on GE StockGE Aerospace’s strong foothold and persistent strength in the commercial and defense aerospace markets, driven by solid build rates and a robust defense budget, bode well for growth. However, high debt level, rising operating expenses and premium valuation are limiting this Zacks Rank #3 (Hold) company’s near-term prospects.While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains and provide a better entry point.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks