GE Aerospace Stock: Buy, Sell, or Hold?
The General Electric of old, a sprawling conglomerate, is no more. Today the GE ticker is fastened to GE Aerospace (NYSE: GE), a company focused on just one industry, aerospace and defense.
This more focused company is a worthy place for the iconic GE ticker to land. But is GE Aerospace stock a buy, sell, or hold today?
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After the long-established General Electric spun off several businesses into their own entities and sold off the rest to others, GE Aerospace remained. The company’s core business is providing parts and services to the aerospace and defense sectors. It’s expected to be a very good niche, at least as far as Wall Street is concerned. Some industry watchers project that the consumer aviation industry will add as many as 45,000 new aircraft over the next two decades or so at a cost of $3.3 trillion. GE Aerospace is well-positioned to serve this growing industry and capture a good share of that market.
The company already has a $149 billion backlog of work to be done on the civilian side of its business. Add in another $18 billion from the defense side of the business and GE Aerospace’s total backlog is well over $150 billion. That’s a lot of work lined up to power the company’s revenues and earnings over the next few years.
GE Aerospace was able to boost earnings by 25% year over year in the third quarter of 2024, which is hard to complain about. Powering the bottom line of the income statement was a 6% increase in revenue and a 150-basis-point jump in the company’s profit margin. It looks very much like GE Aerospace is getting off on the right foot as it starts its stand-alone life (the final spinoff of noncore assets took place in April 2024). These are all solid reasons to consider buying the stock today.
The reasons to continue holding on to GE Aerospace are basically the same as the reasons you might want to buy it. The company looks like it is well-positioned to take advantage of the expected long-term growth in the aerospace sector. But there’s a caveat here. The stock price has roughly doubled in a year.
That’s a very big move over a very short period of time. That period includes a span where GE Aerospace and GE Verona (NYSE: GEV), the last company it spun off, were still one entity. Arguably, the stock should have been worth more at that point. Interestingly, GE Verona’s stock price has more than doubled since it was spun off in April. So, perhaps, the stock rallies here should be viewed with a bit of skepticism. There might be more emotion driving the price move than fact, even though GE Aerospace appears well-positioned to serve a growing market.
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