TLDR
- GE Aerospace delivered Q4 earnings of $1.57 per share versus $1.44 expected, with revenue reaching $11.9 billion against $11.2 billion forecasts.
- The stock declined 0.2% after initially jumping 5% premarket, as the 9% earnings beat lagged GE’s historical 28% average beat margin.
- Fourth-quarter orders surged 74% year-over-year to $27 billion, while operating margins expanded 1.2 percentage points to 22.4%.
- 2026 guidance projects operating profit of $9.85-$10.25 billion and EPS of $7.10-$7.40, both exceeding current Wall Street estimates.
- Trading at 44 times forward earnings after a 69% annual gain, the stock’s valuation left little room for anything less than exceptional results.
GE Aerospace proved once again it can beat Wall Street’s numbers. The problem? Investors have come to expect more.
The aerospace giant reported fourth-quarter earnings of $1.57 per share on Thursday, topping the $1.44 analyst consensus. Revenue came in at $11.9 billion, well ahead of the $11.2 billion estimate.
Compare that to last year’s fourth quarter: $1.32 per share on adjusted sales of $9.9 billion. Growth is evident across the board.
Yet shares slipped 0.2% to close near $318. Early premarket gains of over 5% evaporated as trading progressed.
The disconnect stems from GE’s own track record. Over its previous 12 quarterly reports, the company beat estimates by an average of 28%. Thursday’s 9% beat looks modest by comparison.
This marks GE’s 13th consecutive quarter of earnings beats. That kind of consistency builds high expectations.
Business Fundamentals Show Strength
Look past the stock price reaction and the business metrics tell a positive story. Orders reached $27 billion in the fourth quarter, up 74% from the same period last year.
That order book signals strong demand stretching into future quarters. It’s real business momentum, not just accounting wizardry.
Operating margins climbed to 22.4% from 21.2% a year earlier. The 1.2 percentage point improvement shows GE is extracting more profit from each dollar of sales.
The commercial engine and service segment posted $2.3 billion in operating profit, up 5% year-over-year. Margins in this division dropped 4.2 percentage points to 24%, pressured by higher R&D costs and increased production of newer engine models.
The GE9X engine, designed for Boeing’s 777X aircraft, remains in production ramp-up mode. New engine programs typically carry lower margins initially but pay off over time through aftermarket parts and service revenue.
Forward Guidance Tops Forecasts
Management issued 2026 guidance that beats current Wall Street models. The company expects low-double-digit sales growth, operating profit of $9.85-$10.25 billion, and earnings per share of $7.10-$7.40.
Analysts currently forecast 11% sales growth, $10.1 billion in operating profit, and $7.14 in earnings per share. GE’s guidance midpoints exceed all three metrics.
The aftermarket business continues to benefit from aircraft staying in service longer than normal. Production bottlenecks at Boeing and Airbus have slowed new aircraft deliveries, keeping older planes flying.
Boeing and Airbus are projected to deliver roughly 1,600 aircraft in 2026, up from 1,400 in 2025. More deliveries mean more engines sold, even if original equipment margins run thinner than aftermarket parts.
Commercial air travel demand remains robust. That underlying strength supports both new engine sales and the lucrative parts and service business.
Premium Valuation Leaves No Margin for Error
GE Aerospace shares have climbed 69% over the past year. The stock now trades at 44 times forward earnings, up from 36 times a year ago.
That’s expensive by most measures. When GE started its earnings beat streak in 2023, shares traded around $81. They entered this week above $325.
Quarterly earnings have grown approximately 40% since that streak began. The stock has averaged a 2% gain following each earnings beat over that stretch.
Options traders expected a 4% move in either direction following Thursday’s release. Historical patterns show shares have moved an average of 4% after the past four quarterly reports.
Analyst sentiment remains positive. GE has received 11 upward EPS revisions and just one downward revision over the past 90 days.
The stock has gained 58.62% over the past year and 4.81% over the past three months, entering Thursday’s report with substantial momentum already priced in.
