Key Morningstar Metrics for GE Aerospace
- : USD 307.00Fair Value Estimate
- : ★★★Morningstar Rating
- : WideMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
What We Thought of GE Aerospace’s Earnings
GE Aerospace’s GE commercial engines segment revenue grew 34.0% year over year with a 26.4% operating margin in the first quarter. Defense revenue and margin were flatter but robust. Management reaffirmed its full-year revenue and profit expectations, notwithstanding recent macroeconomic turbulence.
Why it matters: We maintain our admiration for the formidable franchise that GE Aerospace has cultivated and the discipline with which it continues to pursue productivity-enhancing projects throughout the business. In turbulent times, the true durability of a moat like GE’s can prove its worth.
- The company shipped 214 more commercial engines in the first quarter than last year, the vast majority in the Leap family. New engine deliveries provide generally lower margins than aftermarket sales, but the commercial margin remained healthy above 26%.
- With high global aircraft utilization and fewer recent retirements of older jets in recent months, the commercial aftermarket business grew 39% year on year.
The bottom line: We have raised our fair value estimate for wide-moat GE Aerospace to USD 307 per share from USD 293, due to the time value of money. The shares trade within 10% of our fair value estimate, though we anticipate the firm will continue to enhance its dividend and share-repurchase programs.
