GE Aerospace’s (NYSE:GE) Q2: Strong Sales

Industrial conglomerate GE Aerospace (NYSE:GE) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 34.1% year on year to $11.02 billion. Its non-GAAP profit of $1.66 per share was 16% above analysts’ consensus estimates.

Is now the time to buy GE Aerospace? Find out in our full research report.

Revenue: $11.02 billion vs analyst estimates of $9.52 billion (34.1% year-on-year growth, 15.7% beat)
Adjusted EPS: $1.66 vs analyst estimates of $1.43 (16% beat)
Management raised its full-year Adjusted EPS guidance to $5.70 at the midpoint, a 8.1% increase
Operating Margin: 21.2%, down from 23.1% in the same quarter last year
Free Cash Flow Margin: 19.1%, up from 13.4% in the same quarter last year
Market Capitalization: $283.9 billion

One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE:GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, GE Aerospace’s sales grew at a mediocre 6.5% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about GE Aerospace.

GE Aerospace Quarterly Revenue

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. GE Aerospace’s annualized revenue growth of 15.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

GE Aerospace Year-On-Year Revenue Growth

This quarter, GE Aerospace reported wonderful year-on-year revenue growth of 34.1%, and its $11.02 billion of revenue exceeded Wall Street’s estimates by 15.6%.

Looking ahead, sell-side analysts expect revenue to grow 6.9% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

GE Aerospace has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.6%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, GE Aerospace’s operating margin rose by 12.9 percentage points over the last five years, as its sales growth gave it operating leverage.

GE Aerospace Trailing 12-Month Operating Margin (GAAP)

This quarter, GE Aerospace generated an operating margin profit margin of 21.2%, down 1.9 percentage points year on year. The reduction is quite minuscule and shareholders shouldn’t weigh the results too heavily.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

GE Aerospace’s EPS grew at an astounding 21.9% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

GE Aerospace Trailing 12-Month EPS (Non-GAAP)

Diving into GE Aerospace’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, GE Aerospace’s operating margin declined this quarter but expanded by 12.9 percentage points over the last five years. Its share count also shrank by 3%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For GE Aerospace, its two-year annual EPS growth of 52.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q2, GE Aerospace reported EPS at $1.66, up from $1.20 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects GE Aerospace’s full-year EPS of $5.62 to grow 5%.

We were impressed by how significantly GE Aerospace blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Raising full-year EPS guidance was icing on the cake. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 2.4% to $272.66 immediately following the results.

GE Aerospace put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.