GE Aerospace Analysis: Supply Chain, Defense & Financials Post-Spin

The aerospace industry is currently navigating a complex environment marked by surging demand and persistent supply chain bottlenecks. Against this backdrop, General Electric Company, now primarily focused on its aviation business under the name GE Aerospace (GE, stands at a critical juncture. The company's strategic maneuvers in 2025, particularly its intense focus on operational execution and securing key contracts, are shaping its trajectory amidst global geopolitical shifts and evolving market dynamics.

This period represents a significant evolution for the historic industrial giant, following the successful spin-offs of GE HealthCare Technologies Inc. (GEHC in early 2023 and GE Vernova Ltd. (GEV in April 2024. These divestitures have transformed GE into a more focused entity centered on aviation propulsion and systems, aiming to leverage its core strengths in a growing global market. The current environment, characterized by robust demand for new aircraft and increased defense spending, presents both opportunities and challenges that will test the effectiveness of this new, streamlined corporate structure.

The New GE Aerospace: Strategic Focus Post-Spin#

The strategic decision to break up the sprawling conglomerate into three independent, publicly traded companies was a monumental undertaking. The aim was to unlock value by allowing each business segment to pursue its own strategic priorities and capital allocation strategies, free from the complexities and capital demands of the larger entity. For GE Aerospace, this means a sharpened focus on innovation, operational efficiency, and capitalizing on the secular growth trends in commercial aviation and defense.

The market's reception to this transformation has been notable. As of May 28, 2025, GE's stock price stands at $243.78, reflecting a +0.83% change on the day and a market capitalization of approximately $260 billion. This valuation suggests investor confidence in the potential of the focused aerospace business, although it also places pressure on management to deliver on the promised operational improvements and growth.

Operational Headwinds and Supply Chain Resilience#

Despite the strategic clarity gained from the spin-offs, GE Aerospace continues to grapple with significant operational challenges, primarily related to its supply chain. The company relies on a vast network of suppliers for critical components, and disruptions have directly impacted production rates for key products like the CFM Leap turbofan engines, which power many modern narrowbody aircraft.

According to recent reports, GE delivered 10% fewer CFM Leap engines in 2024 compared to 2023. This reduction was largely attributable to shortages of essential raw materials such as titanium and steel, alongside challenges with the availability of semiconductors and complex castings Reuters. These bottlenecks delay engine deliveries, impacting aircraft manufacturers and airlines alike, and also constrain the availability of parts for the lucrative aftermarket services business.

In response, GE has initiated several measures to enhance supply chain resilience. The "Flight Deck" program involves deploying dedicated teams to work closely with suppliers to identify and mitigate bottlenecks. Furthermore, the company has committed substantial capital to strengthening its manufacturing base and supplier network. Plans include investing nearly $1 billion in U.S. manufacturing and supply chain improvements throughout 2025, almost double the previous year's commitment. Efforts to standardize durability kits for Leap engines are also underway, aiming to improve engine reliability, reduce maintenance downtime for airlines, and streamline the parts supply chain.

However, the path to full supply chain recovery remains challenging and uneven. GE executives have indicated that while improvements are being made, disruptions are likely to persist into 2026. This extended timeline for recovery underscores the complexity of the aerospace supply chain and the lead times required to increase production capacity and resolve material shortages. The uneven recovery will likely continue to influence engine delivery schedules and the growth rate of aftermarket services revenue in the near term.

Source: Company Reports, Industry Estimates

Fueling Growth: Major Contracts and Strategic Partnerships#

Despite the operational challenges, GE Aerospace has demonstrated strong commercial momentum in 2025, securing significant contracts that bolster its backlog and provide revenue visibility. A notable win came in May 2025 with a substantial expansion of the partnership with Qatar Airways. This deal involves providing over 400 GE9X and GEnx engines to support the airline's fleet modernization and growth plans GE Official Press Release. This represents one of the largest widebody engine deals in GE Aerospace's history.

Beyond commercial aviation, the company has also strengthened its position in the defense sector. In March 2025, GE was awarded a contract valued at up to $5 billion for F110 engines under foreign military sales agreements. This contract, expected to be completed by December 2030, highlights the increasing global demand for proven military propulsion systems amidst rising geopolitical tensions GE Official Press Release. Additionally, GE secured a subcontract with Bell Textron to supply avionics systems for the U.S. Army's Future Long Range Assault Aircraft (FLRAA) program, with the first flight scheduled for 2026. These defense wins are crucial for diversifying revenue streams and leveraging GE's technological expertise in advanced military applications.

The impact of these contract wins is reflected in GE Aerospace's robust backlog, which exceeded $140 billion as of the first quarter of 2025. Order inflows in Q1 2025 totaled $12.3 billion, indicating continued strong demand across both commercial and defense segments. This strong order book provides a solid foundation for projected mid-to-high single-digit revenue growth for the aerospace division in 2025, despite the lingering supply chain headwinds.

Note: Value for Qatar Airways deal is an estimate based on typical engine contract sizes. Source: Company Press Releases, Industry Reports

Market Dynamics and the Defense Sector Catalyst#

The broader aerospace market is experiencing a period of significant expansion. Analysts forecast an average annual growth rate (CAGR) of 8.7% for aerospace revenues through 2029 Zacks. This growth is primarily driven by the continued recovery in global air travel, necessitating airline fleet expansions and modernization, and a notable increase in defense spending worldwide.

Geopolitical instability and heightened global tensions have spurred nations to increase their military budgets. The U.S. proposed a defense budget of $1.01 trillion for fiscal year 2026, representing a significant +13% increase. Similarly, European and Asian countries are boosting their defense expenditures; Germany announced an increase equivalent to 1.6% of its GDP, and India raised its defense budget by +9.53%. These increases translate directly into increased demand for military aircraft, engines, and related systems, a key area of focus for GE Aerospace's Defense & Propulsion Technologies (DPT) segment.

The DPT segment saw a +1% increase in revenue in Q1 2025, reaching $2.32 billion. More importantly, the segment's book-to-bill ratio stood at 1.4x, indicating that new orders are significantly outpacing current revenues, signaling strong future growth potential. The previously mentioned F110 engine and FLRAA contracts are direct beneficiaries of this trend. Analysts anticipate mid-to-high single-digit revenue growth for the DPT segment in 2025, contributing positively to GE's overall performance and providing a degree of stability amidst the volatility in the commercial sector supply chain.

Source: Industry Forecasts, Analyst Reports

Source: Company Press Releases, Government Announcements

Financial Performance and Key Metrics#

Analyzing GE's financial performance requires careful consideration of the recent spin-offs, which significantly alter year-over-year comparisons for total company revenue. For the fiscal year ending December 31, 2024, GE reported $38.7 billion in revenue, compared to $67.95 billion in 2023. This -43.05% change reflects the divestiture of the Healthcare and Vernova businesses, leaving primarily the Aerospace results.

Despite the change in revenue base, profitability metrics for the remaining GE Aerospace business show improvement. The gross profit margin increased significantly to 37.19% in 2024, up from 18.26% in 2023 (note: historical margins reflect the combined entity, while 2024 is primarily Aerospace). Similarly, the operating income margin rose to 17.2% in 2024 from 5.26% in 2023. Net income for 2024 was $6.56 billion, a -30.85% decrease from $9.48 billion in 2023, again influenced by the portfolio changes. However, the net income margin improved to 16.94% in 2024 from 13.95% in 2023.

Earnings per share (EPS) from continuing operations, which better reflects the ongoing business, was $6.33 for the trailing twelve months (TTM) ending Q1 2025. The TTM net income per share stands at $6.54. GE has also demonstrated consistent earnings beats recently, reporting an actual Q1 2025 EPS of $1.49 against an estimated $1.27, and Q4 2024 EPS of $1.32 against an estimated $1.05. These beats indicate management's ability to navigate the current operating environment effectively.

Free Cash Flow (FCF) generation is a critical metric for industrial companies like GE. For FY 2024, GE reported $3.68 billion in FCF, a +2.62% increase from $3.58 billion in FY 2023. The TTM free cash flow per share is $4.12. The company's balance sheet shows total assets of $123.14 billion and total liabilities of $103.58 billion as of December 31, 2024. Total debt stood at $19.27 billion, with a net debt position of $5.65 billion. The debt-to-equity ratio is 1.02x, and the total debt to EBITDA (TTM) is 0.73x, suggesting a manageable debt level relative to earnings power.

Key profitability and efficiency ratios for the TTM period ending Q1 2025 include a Return on Equity (ROE) of 36.78% and a Return on Invested Capital (ROIC) of 7.17%. The current ratio is 1.08x, indicating adequate short-term liquidity. The company has also increased its dividend, with the most recent declared dividend being $0.36 per share (paid April 2025), up from $0.28 in previous quarters of 2024. The TTM dividend per share is $1.20, resulting in a dividend yield of 0.49% and a payout ratio of 17.5% based on TTM net income, suggesting ample room for future dividend growth or reinvestment.

Source: Monexa AI Financial Data (based on company filings)

Analyst Expectations and Valuation Context#

Market analysts hold a generally positive view on GE Aerospace's future prospects, reflecting confidence in the focused strategy and the strength of the aerospace market. Consensus estimates project continued revenue growth, with an estimated CAGR of +8.74% for 2025. EPS is expected to rise significantly, with estimates of $5.56 for 2025 and reaching $9.82 by 2029.

This optimistic outlook is reflected in GE's current valuation multiples. The TTM PE ratio stands at 37.29x. Looking forward, the forward PE ratio is estimated at 42.78x for 2025, decreasing to 36.62x in 2026 and 32.63x in 2027. The Price-to-Sales ratio (TTM) is 6.55x, and the Price-to-Book ratio (TTM) is 13.55x. The Enterprise Value to EBITDA (TTM) is 27.18x, with forward EV/EBITDA estimates at 55.2x for 2025 and 49.93x for 2026.

These valuation multiples are relatively high, particularly the forward PE and EV/EBITDA ratios for 2025, which are influenced by the lower earnings base immediately following the spin-offs. While they suggest investor enthusiasm for GE's streamlined structure and growth potential in the aerospace sector, they also imply that a significant portion of future growth is already priced into the stock. This high valuation environment places additional pressure on management to execute flawlessly and deliver consistent earnings and cash flow growth to justify the market's expectations.

Strategic Execution and Historical Context#

GE's recent transformation is the latest chapter in a long history of strategic portfolio management. Over decades, the company has evolved from a broad industrial and financial services conglomerate to a highly focused aviation pure-play. Previous strategic shifts, such as the divestiture of its financial services arm (GE Capital) and various industrial businesses, were often aimed at simplifying the company structure, reducing debt, and focusing on core industrial strengths.

Assessing management's execution under CEO H. Lawrence Culp Jr. requires looking at their success in navigating this complex restructuring while simultaneously addressing operational challenges. The successful completion of the spin-offs, though complex, has been a major milestone. However, the persistent supply chain issues highlight the ongoing operational hurdles. Management's investment of nearly $1 billion in supply chain improvements in 2025 signals a commitment to addressing these bottlenecks directly, a crucial test of their operational execution capabilities.

The focus on the high-margin aerospace business aligns with historical patterns of companies divesting lower-margin or less strategic assets to concentrate on areas with competitive advantages and stronger growth prospects. GE's long-standing dominance in aircraft engines provides such an advantage. The strategic pivot towards strengthening the defense segment, particularly through significant contract wins like the F110 deal, demonstrates an adaptation to the current geopolitical climate and leverages existing military propulsion expertise.

Capital allocation post-spin is also a key indicator of management's strategic priorities. The increase in the quarterly dividend to $0.36 reflects confidence in the future cash flow generation of the focused aerospace business and signals a return of capital to shareholders, a move often seen in more mature, stable industrial companies, though GE Aerospace is also positioned for growth. Share repurchases, totaling $5.83 billion in 2024, also reflect a commitment to returning value, although the primary focus remains on reinvesting in the core business and supply chain to support growth.

What This Means For Investors#

For investors, the new GE Aerospace presents a fundamentally different investment proposition than the historical conglomerate. The company is now tightly focused on a sector with strong secular growth drivers in both commercial aviation and defense. The significant backlog of over $140 billion provides substantial revenue visibility for the coming years.

However, the investment thesis is not without risks. The persistent supply chain challenges remain a key operational hurdle that could constrain production, delay deliveries, and impact aftermarket service revenue growth in the near term. While management is investing heavily to mitigate these issues, the full recovery timeline extends into 2026. Furthermore, the company's current valuation multiples appear high, suggesting that the market has already priced in significant future growth. This leaves less room for error in execution.

The increasing global defense budgets represent a significant tailwind for GE's DPT segment, providing a valuable counter-cyclical element to the commercial aviation business. Strategic wins in this area, such as the F110 and FLRAA contracts, are important indicators of the company's ability to capture this growing market opportunity.

Ultimately, the success of GE Aerospace will depend on its ability to navigate the supply chain complexities, translate its strong backlog into profitable revenue growth, and execute on its strategic initiatives to enhance operational efficiency and capitalize on market demand. The current period is a critical test for the management team as they aim to demonstrate the value unlocked by the historic portfolio transformation.

Conclusion#

General Electric Company, now operating as GE Aerospace following its significant portfolio restructuring, is navigating a dynamic market landscape defined by robust demand and complex operational challenges. The strategic focus on aviation, supported by a strong backlog and key contract wins in both commercial and defense sectors, positions the company to capitalize on long-term industry growth trends.

While supply chain disruptions remain a near-term headwind impacting production and delivery schedules, management's proactive investments and operational programs aim to build greater resilience. The favorable market environment, particularly the surge in global defense spending, provides a significant tailwind for the company's Defense & Propulsion Technologies segment.

The financial data reflects a company in transition, with profitability metrics showing improvement in the core business, even as top-line comparisons are distorted by the spin-offs. Strong free cash flow generation supports capital allocation decisions, including increased dividends. However, the company's current valuation suggests high market expectations, placing a premium on flawless execution. The coming quarters will be crucial in demonstrating GE Aerospace's ability to overcome operational hurdles and deliver the sustained growth and profitability anticipated by investors in the focused aerospace pure-play.