GE Aerospace (GE) will release its third-quarter 2025 financials on Tuesday, October 21. Shares of this jet engine manufacturer have been on a strong upward trajectory in 2025, rising 77% year to date. This rise reflects higher orders, growing backlog, and steady gains in operating profits and earnings per share (EPS).
The company’s performance in the first half of 2025 was strong. Adjusted revenues rose 18% during the period, while operating margins expanded 230 basis points. Adjusted EPS also rose nearly 47%, reflecting GE Aerospace’s ability to convert higher revenue growth into higher profitability. The company ended the second quarter with a significant backlog of $175 billion, indicating strong growth potential in the upcoming quarter.
GE’s fundamentals look strong heading into third-quarter earnings. Furthermore, the stock’s 14-day relative strength index (RSI) stands at 52.21, which is comfortably below the overbought threshold of 70. This suggests that GE Aerospace shares have room to run if the upcoming earnings report and guidance exceed market expectations.
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GE Aerospace is well positioned to extend its strong momentum during the third quarter, supported by strong demand in both its commercial and defense businesses. The company has benefited from a recovery in air travel and sustained growth in its maintenance and services business, which continues to boost its profits.
In the Commercial Engines and Services (CES) segment, GE Aerospace leverages its large installed base of commercial aircraft engines. This translated into strong financial performance, with service orders up 28% and equipment orders up 26%. The strength reflects the high volume of spare parts and the right mix of prices and services. Service revenues jumped 29%, with spare parts sales rising more than 25%. This momentum will push GE Aerospace’s top line higher in the third quarter.
The company’s defensive operations are also likely to contribute effectively to its growth. Orders in this segment rose 24% year-on-year in the second quarter, resulting in a healthy book-to-invoice ratio of 1.2 times. Defense business revenues grew 7%, driven by a 6% increase in the Defense and Systems unit and a 9% increase in Propulsion and Additive Technologies.
While GE Aerospace delivers strong revenue growth, it has consistently beat earnings expectations, thanks to a growing combination of high-margin services revenue and operating leverage. Notably, the company has beat Wall Street earnings estimates for four straight quarters, including a notable earnings surprise of 16.1% in the second quarter.
Looking ahead to the third quarter, analysts expect GE Aerospace to report earnings of about $1.46 per share, which represents a 27% increase year over year. With both the commercial and defensive sectors firing on all cylinders, the company is well positioned to deliver another strong set of results that could support its share price.
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GE Aerospace has performed well, generating higher revenues and margins. However, the rise has also led to higher valuations. Currently, GE is trading at a forward price-earnings ratio of about 51 times, which is high considering analysts’ expectations for earnings growth of 16.9% in 2026. Such a multiple suggests that the market has already priced in a lot of near-term optimism. However, the outstanding rating also reflects confidence in GE Aerospace’s long-term earnings strength, which continues to strengthen thanks to its high-quality, service-based business model.
GE Aerospace’s service division contributes approximately 70% of total revenues. This segment provides recurring, high-margin income streams related to the maintenance and support of GE’s massive base of commercial aircraft engines. As the installed base expands, which management projects will grow at a low-to-mid single-digit CAGR through the end of the decade, the services business will likely grow along with it, increasing the company’s profitability and cash flow.
Moreover, the servicing process gives GE a strategic advantage. By maintaining ongoing customer relationships, GE gains valuable insights that influence product innovation and ensure its future products are designed to meet evolving market needs.
The macro environment also supports GE Aerospace’s long-term trajectory. Demand for air travel is expected to rise, increasing GE’s installed engine base and service revenue potential.
On the defense side, GE Aerospace is benefiting from modernization programs and increased defense spending around the world amid rising geopolitical tensions. Management expects the defense propulsion market to grow at a mid-single-digit annual rate through 2028, supporting sustainable earnings growth.
Despite its rich valuation, GE Aerospace’s fundamentals remain strong, supported by both trade and defensive tailwinds. Wall Street analysts maintain a “strong buy” rating on the stock.
In short, despite GE’s high valuation, its durable earnings base, expanding services business, and exposure to structural growth in global aviation suggest it represents a solid long-term investment.
On the date of publication, Amit Singh had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data contained in this article are for informational purposes only. This article was originally published on parchart.com
