General Electric Aerospace reported strong 1Q24 results on April 23, 2024, with a beat on EPS versus consensus. The company saw revenue growth of 15.5% YoY to $8.1 billion, with profit increasing by 15.3% YoY to $1.5 billion. Orders also increased by 34% YoY to $11.0 billion, with growth in both Commercial Engines & Services and Defense & Propulsion Technologies. Adjusted EPS on a consolidated basis rose to $0.92 per share, up 46% YoY from the previous year. Following the positive results, the company raised its FY24 outlook, expecting revenue growth in the lower double-digits and operating profit between $6.2 and $6.6 billion for the year. GE stock rose by 8.3% following the announcement, indicating a positive reaction from investors.
On April 2, General Electric spun-off GE Vernova, and the remaining company was renamed GE Aerospace. The company was valued at $161.26 per share, with a market capitalization of $176.5 billion. An intrinsic value of $175.00 per share was calculated for GE Aerospace using the 2025e EV/EBITDA methodology, with a ‘Hold’ rating and an implied 8.5% upside from the current market price. The company’s outlook includes revenue growth in the lower double digits for FY24, with an operating profit range of $6.2 to $6.6 billion for the year.
GE Aerospace’s profit and revenue gains in 1Q24 may persist, driven by strong maintenance and new engine demand. However, margins might decrease as spare demand rises and new engine builds increase. The company is the market leader in narrow-body and wide-body engines, with a strong portfolio in the defense business. Boeing’s production problems may lead to a higher mix of spares as they are GE’s largest customer for margin-dilutive new engines. Supply chain challenges are expected to persist for GE and the industry.
The Company’s future outlook includes a focus on delivering revenue growth in the lower double-digit range for FY24. They have raised their operating profit guidance, expecting between $6.2 and $6.6 billion for the year. Adjusted EPS is forecasted to be between $3.80 and $4.05 for the year, with free cash flow expected to exceed $5.0 billion. Commercial Engines & Services and Defense & Propulsion Technologies continue to expect revenue growth, with operating profit forecasts for each segment. GE Aerospace hosted an Investor Day outlining the company’s strategy, with a target of $10 billion in operating profit by 2028 and a $15 billion share buy-back program.
Other updates include share repurchases, investments in manufacturing facilities and supply chain, new orders for engines, and agreements with airlines. The company also introduced FLIGHT DECK, their lean operating model, to accelerate progress and ensure focused execution. GE Aerospace’s 1Q24 performance reflected strong revenue growth of 15.5% YoY to $8.1 billion, driven by pricing, spare parts volume, and increased deliveries. Commercial Engines & Services revenue rose 16.8% YoY to $6.1 billion, with Defense and Propulsion Technologies revenues also increasing. Orders and revenue for both segments showed significant growth compared to the previous year. Adjusted EPS was up 46% YoY to $0.92 per share in 1Q24.
