TenQ

The GE Aerospace story

GE Aerospace makes and services commercial and military jet engines, with the central question whether its vast service business can sustain profit growth as new engine deliveries expand and pressure margins.

Written from GE Aerospace's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $318.24share price, last close
  • $330.2Bmarket value
  • 19/36TenQ Score checks passed
  • 17.4%growth a year the price assumes

The story in brief

  • Services define the business. Servicing accounts for 85% of GE Aerospace's $210.8 billion backlog, linking its economics to decades of maintenance on installed engines.
  • Growth carries costs. Commercial Engines & Services revenue rose 27% in the quarter to June 2026, but its operating margin declined to 27.3% from 28.9%.
  • Cash expectations are demanding. The reverse DCF implies free cash flow after stock pay growing 17.4% annually for ten years, against a historical annual rate of -12.5% over the last 10 years.

What drives the business

  • GE Aerospace's installed base of approximately 50,000 commercial and 30,000 military aircraft engines supports a business in which engines are delivered close to cost and earn money through decades of spare parts and shop visits.
  • Services represent $178.7 billion of its $210.8 billion backlog, while Commercial Engines & Services generated $9.7 billion of revenue and $2.7 billion of profit in the quarter to June 2026, compared with $475 million of profit from Defense & Propulsion Technologies.
  • Commercial services revenue grew 32% in the first half of 2026, alongside record internal shop visit output in the quarter to June 2026 and total engine delivery growth of 31% in the first half of 2026, including 41% growth for LEAP.
  • Commercial agreements include up to 120 LEAP-1B engines for Copa Airlines, while defense agreements include F404 engines for Turkish Aerospace's HÜRJET trainer and CT7 engines for Leonardo Helicopters' UK Ministry of Defence program.
  • The certified LEAP-1B durability kit is expected to deliver approximately 2x improvement in time-on-wing, making engine durability and customer operating costs an important part of the product strategy.

What the price assumes

At $318.24, the reverse DCF implies that free cash flow after stock pay grows 17.4% a year for ten years, using a 10.2% discount rate.

The historical rate on the same cash measure is -12.5% a year over the last 10 years, and the TenQ check sets a -4.2% bar by moving that record halfway toward 4%.

Revenue grew 21.7% over the last twelve months and free cash flow reached $8.4 billion, but those figures do not establish the sustained growth in cash after stock pay embedded in the price.

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What could change the story

  • Higher new engine volumes, including GE9X, investment and inflation reduced the commercial segment's operating margin to 27.3% in the quarter to June 2026 from 28.9%, despite revenue growth of 27%.
  • Supply constraints, product durability problems or slower shop turnaround could interrupt the delivery and service expansion behind the raised guidance.
  • Total debt of $19.2 billion exceeds cash and short-term investments of $9.3 billion, while near-term liquidity of 0.98 and interest coverage of 1.86 fail the TenQ financial health checks.
  • Legacy insurance remains a separate funding risk, with long-term care accounting for $25.5 billion of $34.8 billion owed to policyholders.
  • Cash returned to shareholders amounted to 119.2% of free cash flow, leaving distributions above internally generated cash even as the business funds investment.

What to watch next

  • For full-year 2026, management raised guidance to adjusted revenue growth in the high-teens percent range, operating profit of $10.55-$10.75 billion and free cash flow of $8.9-$9.2 billion.
  • Commercial services growth and segment margins will show whether the business can meet its 2026 outlook for services revenue growth in the low 20s percent and commercial operating profit of $10.25-$10.35 billion.
  • Engine deliveries, shop visit output and progress toward full LEAP-1B durability kit implementation at the beginning of 2027 will test operational execution.
  • Updates on the acquisition of Consolidated Precision Products announced in September 2026 should clarify timing, closing conditions and expected benefits.

Sources

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