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Aerospace & Defense · #81 in the Retail 100

General Electric

GE
The war-driven defense buildup↑
Our rating
hold
12-month target
$369.40 +15.2%
Expected vs. S&P 500
-2.7 ptsSee the math
Next earnings
Jan 21In 77 days

Boeing's 777X arriving hurts GE first: the GE9X, its only engine, sells at a loss, and GE expects those losses to grow about $300M in 2027.

Summary

GE Aerospace builds jet engines, but most of its profit comes from overhauling and supplying parts for engines already flying, and that work is still growing fast. Defense engines, about a quarter of sales, grow more slowly at about half the margin. GE expects its overall margin to stay flat in 2027 as it ships more money-losing engines for Boeing's delayed 777X, so profit grows only about as fast as sales. The stock still trades at a premium, so it needs margins to rise again in 2028, as management expects.

$320.67
+$17.99 (+5.94%)Past year
What General Electric does

GE Aerospace makes jet engines, many through CFM, a 50-50 venture with France's Safran. About 50,000 of its commercial engines are installed on planes, and servicing engines brings in about 70% of revenue.3,24

What it sells

  • Engine repairs and parts57% of segment revenue, 2025

    Overhauls and spare parts for commercial engines already flying. Most of GE's profit comes from here.

  • Defense and propulsion24% of segment revenue, 2025

    Fighter and helicopter engines for the U.S. military and allies, plus parts makers like Avio Aero. Margins are about half the commercial side's.

  • New commercial engines19% of segment revenue, 2025

    CFM's LEAP engines for the Boeing 737 MAX and Airbus A320neo, plus widebody engines. New engines earn little but bring decades of repairs.

Who buys it

Airlines and leasing companies buy repairs and parts; Boeing and Airbus buy new engines; the U.S. government was 10% of 2025 revenue. Because servicing drives profit, results follow how much airlines fly more than how many planes get built.

Where you've seen it

Under the wing of every Boeing 737 MAX, and every 737 model since 1981, labeled CFM rather than GE.

How the business makes money

The backstory

Engine makers sell engines at thin margins to win spots on new planes, then earn the profit back over decades of repairs. GE's older CFM56 fleet is still in its heavy overhaul years and very profitable. Its successor, the LEAP, earns less on repairs while it is young. CEO Larry Culp's answer is more repair capacity, LEAP durability fixes, and buying castings maker CPP to ease parts shortages.

GE wins spots on new planes with thinly priced engines, then earns most of its profit servicing them for decades. Profit grows as the fleet ages into heavy overhauls.1,2,3,4,22

  1. 1 · EntryEngine saleNew engines earn little at first. Launch pricing on LEAP keeps equipment margins thin, but each sale adds decades of service work.
  2. 2 · AnnuityShop visitsEvery engine returns for overhauls. Airlines must send engines in for heavy maintenance after set hours of flying.
  3. 3 · Cash engineSpare partsParts carry the profit. Spare parts are about 40% of GE's services revenue, and higher prices helped lift profit last quarter.
  4. 4 · HandoffCFM56 to LEAPRepair work is shifting to LEAP. LEAP overhaul volume rose over 40% last quarter as the fleet ages.
  5. 5 · DragGE9X lossesThe 777X engine costs money first. Losses grow as shipments ramp, and GE says they should start to ease from 2028 as unit costs fall.
  6. 6 · PayoutBuybacks and CPPCash goes back to shareholders and into supply. GE bought back $2.0B of stock last quarter and will borrow to help buy CPP.

Advantages

The largest commercial engine fleet

Major advantage

This is the main reason to own GE. About 50,000 GE and CFM commercial engines are installed, and each needs overhauls and parts for decades. Rivals cannot build a fleet like that quickly, because an airline usually keeps one engine type for a plane's whole life.3

The engine on most new single-aisle jets

Strong advantage

A big advantage in the busiest part of the market. CFM's LEAP is the only engine on the 737 MAX and one of two choices on the A320neo, so every MAX and many A320neos add to GE's future repair work. GE took commitments for more than 1,800 engines at this summer's Farnborough air show.1,3,24,25

Owning more of its parts supply

Supporting

Helpful later, not yet. Parts shortages have capped GE's output, so it agreed to buy castings maker CPP for $11.75B. The deal is expected to close in the second half of 2027, and GE says the added capacity will serve the whole industry.9,2,4

What's changing

Paying for the 777X before it earns

GE raised its 2026 forecast again in October, yet on October 27 the stock was about 23% below its August high as attention moved to 2027. Management expects services growth to slow and margins to stay flat as GE9X shipments for Boeing's 777X ramp up. It also agreed to buy CPP and will borrow to help pay for it.1,2,4,9,23

Competitors

Who else an investor would consider, and how they compare.

CompanyMarket valueWhat it doesCompared with GE Aerospace
GE Aerospacethis stock
$331.34B
GE Aerospace makes jet engines, many through CFM, a 50-50 venture with France's Safran. About 50,000 of its commercial engines are installed on planes, and servicing engines brings in about 70% of revenue.
RTX (Pratt & Whitney)RTX—Geared turbofan engines for the A320neo, plus aircraft parts and missiles.A metal flaw has kept Pratt-powered A320neos parked for three years; LEAP needed smaller fixes.12
Rolls-RoyceRYCEY—Widebody engines for long-haul jets, paid mostly by hours flown.Rolls-Royce lives on widebodies; GE earns most from narrowbody engines.10
SafranSAFRY—French maker of engines, landing gear and cabin equipment; GE's CFM partner.Safran owns half of CFM; GE adds widebody and defense engines.11,3