GE Aerospace (GE) topped second-quarter earnings early Tuesday, the first as a pure-play aerospace firm. GE stock surged, breaking out of a tight base pattern.
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GE Aerospace Earnings
Estimates: Analysts, on average, expected GE earnings of 99 cents a share on revenue of $8.44 billion, according to FactSet.
Results: GE earnings comfortably beat at $1.20 a share, soaring 62% vs. a year earlier. Total revenue rose nearly 4% to $9.09 billion.
Revenue rose 6.9% in GE’s commercial engines and services business to $6.13 billion. Orders surged almost 38% to $9.15 billion amid booming demand for spare parts. Defense revenue rose 1.1%, with orders down 24.5%.
Free cash flow swelled almost 17% to $1.1 billion, beating views.
Outlook: GE Aerospace now sees full-year adjusted EPS of $3.95-$4.20, lifting the prior range by 15 cents from April’s target of $3.80-$4.05. Analysts had forecast GE EPS of $4.07.
The company sees free cash flow of $5.3 billion-$5.6 billion vs. its prior forecast for more than $5 billion.
GE Aerospace Stock
Shares soared 5.7% to 172 in Tuesday’s stock market action., hitting an intraday high of 177.20. On Monday, GE stock climbed 2.3%, just retaking the the 50-day line.
GE Aerospace stock is moving out past a 170.80 buy point from an 11-week flat base. On Monday, GE just reclaimed its 50-day line.
Shortly after Tuesday’s open, GE offered an early entry, breaking a downward-sloping trendline and clearing the July 10 short-term high of 165.99.
GE stock was added to SwingTrader on Tuesday.
GE Aerospace Now A Pure Play
The former General Electric completed its yearslong dismantling in April, dividing GE Aerospace and GE Vernova (GEV) into independent companies. The GE Vernova business houses GE’s former energy unit. GE Aerospace, a manufacturer of jet engines, kept the “GE” stock ticker.
GE Healthcare (GEHC) launched as a separate company in January 2023.
Days after its April 2 debut, GE Aerospace announced that it would raise its dividend by 250%. GE stock now provides a quarterly dividend of 28 cents per share, up from 8 cents previously.
The company emphasizes returning capital to shareholders by way of dividends and buybacks.
Its strong earnings underpinned $1.7 billion of free cash flow in the first quarter. Citing cash generation, some analysts are watching whether the company will increase the dividend again.
Strong Demand For Jet Engines
GE Aerospace has commanded decades of robust demand for commercial and military jet engines, analysts say. However, some analysts worry that growing demand could strain its supply chain.
The company supplies the Leap engine for the Boeing (BA) 737 Max and Airbus (EADSY) A320neo narrow-body jets. Its GEnx engine powers Boeing 747 and 787 widebody jets.
Boeing’s woes mean that airlines are hanging on to older jets. That has boosted GE Aerospace’s aftermarket business.
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