While GE Aerospace’s (GE) current growth levels are impressive and the company has multiple, strong, potential, positive catalysts, the stock’s current valuation is rather elevated.
Making the latter point particularly salient is the fact that analysts, on average, expect its revenue growth to fall markedly in 2026 compared with this year.
In light of these points, investors should wait to see if either the company’s longer-term, potential growth catalysts positively move the needle of its financial results beyond current expectations or if its revenue expands more quickly than expected.
If either or both of these scenarios materialize, GE stock may be worth buying down the road.
Impressive Growth
In the second quarter, the firm’s revenue climbed 21% versus the same period a year earlier to $11 billion, while its free cash flow soared 92% year-over-year to $2.1 billion.
For all of 2025, GE projects that its revenue, excluding certain items, will increase about 15%, while its free cash flow will come in at an impressive $6.5 billion to $6.9 billion. And from 2025 to 2028, the firm estimates that its adjusted revenue will advance at a compound annual growth rate of at least 10%.
Potential, Positive Catalysts
Commercial engines on which GE work power about 75% of the world’s narrowbody flights, leaving the company very well-positioned to generate huge amounts of revenue from these engines’ service visits over the medium-to-long term. Indeed the company expects its profits from its narrowbody engines to jump 70% by 2028.
On the defense side, the Pentagon early this year increased the amount that it will pay the company for manufacturing the Next Generation Adaptive Propulsion (NGAP) fighter jet engines to $3.5 billion from $1 billion.
Further, the plane engine maker is teaming up with Merlin Labs to create “an artificial intelligence (AI)–powered autonomy platform for military and civilian aircraft,” while it has unveiled rotating detonation combustion engines that reportedly make missiles and aircraft significantly faster and more elusive. The technology is also supposed to enable them to travel further.
Moreover, GE is partnering with Kratos (KTOS) to develop engines for drones. Finally, turning to a huge overseas market, GE just made a roughly $1 billion deal with India to provide the Asian country with 113 fighter jet engines.
All of these initiatives can become huge, positive needle movers for GE’s top and bottom lines over the longer term.
Valuation Is a Sticking Point
GE stock has a rather high forward price-earnings ratio of nearly 44. Its PEG ratio, a type of valuation that factors in future growth, is also elevated coming in at 5.85 times. In August, for example, the S&P 500’s average PEG ratio was 1.56 times.
Meanwhile, making its valuation less attractive is the fact that analysts, on average, expect its revenue growth to slow markedly to 10.8% next year from 15.7% in 2025.
Finally, the shares have nearly eclipsed the price target on them set in July by Citi which was bullish on the name at the time. Specifically, the bank raised its price target on the stock to $309 from $296 after its strong Q2 results, and it kept a Buy rating on the shares.
But GE is currently trading very close to $300.
*This article is intended to be informational only; it is not financial advice.
