$GE Aerospace(GE)$ is scheduled to report its Q1 2025 earnings results before the market opens on Tuesday, 22 April 2025.
The consensus among analysts is for adjusted EPS to be $1.27 which is within the range around $1.26 to $1.29. This would represent a significant increase compared to the $0.82 reported for the corresponding segment in Q1 2024 (before the spin-off).
Analysts project GE Aerospace's standalone revenue for Q1 2025 to be approximately $9.04 billion. Note: Direct year-over-year comparison for revenue is complex due to the recent spin-off of GE Vernova.
GE Aerospace (GE) Last Positive Earnings Call Saw Share Price Decline By 2.96%
GE had a positive earnings call on 23 Jan 2025 which saw its share price dropped by 2.96%.
The earnings call highlighted GE Aerospace's strong financial performance in 2024, marked by significant revenue, profit, and cash flow growth. Despite supply chain challenges impacting some areas, the company showed resilience and adaptability. The positive outlook for 2025, with expected growth across key metrics, underscores confidence in overcoming current challenges. The overall sentiment conveyed optimism due to robust demand and strategic initiatives.
GE Aerospace (GE) Guidance
During the GE Aerospace Q4 2024 earnings call, executives provided robust guidance for 2025, emphasizing anticipated continued growth across various financial metrics. They forecast low double-digit revenue growth, driven by mid-teens growth in the Commercial Engines & Services (CES) segment, with CES profit expected to increase by $700 million at the midpoint. The company aims for total profit between $7.8 billion and $8.2 billion, translating to EPS between $5.10 and $5.45, reflecting a 15% rise at the midpoint. Free cash flow is projected to reach $6.3 billion to $6.8 billion, maintaining a conversion rate above 100%. GE Aerospace plans to increase its share repurchases to $7 billion and raise its dividend by 30%, pending board approval, underscoring strong shareholder returns.
The company highlighted the strategic use of their FLIGHT DECK operating model to enhance operational efficiency and address supply chain constraints, supporting both new engine deliveries and aftermarket services.
Key Factors Influencing GE Aerospace's Q1 2025
GE Aerospace expects low double-digit revenue growth, profit in the range of $7.8 billion to $8.2 billion, EPS growth of 15% at the midpoint, and free cash flow of $6.3 billion to $6.8 billion for 2025.
Free cash flow increased by 21% in Q4 and by nearly 30% for the year, reaching $6.1 billion with conversion over 120%.
In Q4 2024, orders increased by 46% and revenue grew by 16% with double-digit growth in services and equipment. For the full year, revenue was up 10% and profit increased by 30% to $7.3 billion.
Commercial Aviation Recovery
Demand for New Aircraft: Continued recovery in global air travel post-pandemic could drive orders for Boeing 737 MAX and Airbus A320neo, both using GE’s LEAP engines. Production ramp-ups by Airbus/Boeing would directly boost engine deliveries.
Aftermarket Services: Increased flight activity enhances maintenance revenue, a high-margin segment for GE. Growth here depends on global fleet utilization rates.
Q4 orders were up 50%, revenue increased by 19%, and profit rose by 44%. For the full year, profit grew by 25% to $7.1 billion.
Supply Chain and Production Challenges
Persistent supply chain bottlenecks (e.g., semiconductor shortages, labor gaps) could delay engine deliveries. Mitigation efforts and strategic supplier partnerships will be critical.
Supply chain issues led to lower internal shop visit volume and flat commercial engine output with LEAP deliveries down 5% in Q4 2024.
Defense Sector Contributions
Geopolitical tensions may elevate defense budgets, benefiting GE’s military engine division (e.g., engines for fighter jets, helicopters). Monitoring U.S. and allied defense spending is key.
For Q4 2024, orders were up 22%, and defense units nearly doubled sequentially. Full-year revenue rose by 6% and profit increased by 17% to $1.1 billion.
Economic and Regulatory Environment
Recession Risks: A downturn could lead airlines to defer orders, impacting new engine sales. Interest rates affecting airline financing costs may also play a role.
Sustainability Pressures: Stricter emissions regulations might accelerate demand for GE’s advanced, fuel-efficient engines or hybrid technologies (e.g., RISE program).
Competitive Landscape
Market share shifts among rivals like Pratt & Whitney (GTF engines) and Rolls-Royce (UltraFan) could influence GE’s positioning. Innovation in sustainable tech will be a differentiator.
Despite strong demand, material constraints and supplier issues affected the ability to meet full potential, requiring ongoing efforts to improve supply chain efficiency.
GE Aerospace (GE) Price Target
Based on 16 Wall Street analysts offering 12 month price targets for GE Aerospace in the last 3 months. The average price target is $230.67 with a high forecast of $261.00 and a low forecast of $200.00. The average price target represents a 26.43% change from the last price of $182.45.
This will be the first quarterly report for GE Aerospace operating independently, making its performance metrics and forward-looking guidance particularly important for investors.
As part of the larger General Electric, the aerospace segment reported strong Q4 2024 results in January 2025, with double-digit growth in orders, revenue, and profit.
So it would be important to take note that price swing might happen if there is an earnings surprise.
Technical Analysis - Exponential Moving Average (EMA)
GE have been defending the 200-day period and the bulls are trying to make a daily uptrend but the impact of tariffs could be seen on GE, as GE need imports for its parts, which is being derailed by the charges imposed, though there is a 90-day pause, but the long-term view does not look good.
RSI is not showing signs of improved momentum as investors are staying cautious, and we might have a bull case if there is continued strong airline demand, resolved supply issues, and defense contract wins could lead to revenue growth above expectations, with robust aftermarket sales.
But with the tariffs, we could be seeing a bear case forming with prolonged supply chain disruptions, economic slowdown, or competitive losses might pressure margins and delay order fulfillment.
I would stay on the side to watch how the tariffs development is like before deciding whether to take a position.
Summary
GE Aerospace’s performance will hinge on aviation recovery trends, supply chain resilience, and strategic execution post-spinoff.
Analysts and investors will likely focus on continued demand in commercial aviation (engine deliveries and aftermarket services), performance in the defense segment, operating margins, free cash flow generation, and any updates to the company's full-year guidance now that it is standalone.
Appreciate if you could share your thoughts in the comment section whether you think GE would be able to provide an earnings surprise if they have significantly overcome the supply chain constraints.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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