What Happened?
Shares of industrial conglomerate GE Aerospace (NYSE:GE) jumped 9.4% in the pre-market session after the company reported strong fourth-quarter results, which blew past analysts' revenue estimates amid improved demand for spare parts, commercial engines, and services. Growth accelerated during the quarter as orders rose by 46% compared to the previous year. The improved demand and pricing enabled the company to grow its cash flow and report earnings ahead of analysts' expectations.
Guidance was also encouraging, with the company expecting double-digit revenue and EPS growth (in line with consensus) in FY 2025, with greater than 100% free cash flow conversion. Management also highlighted the focus on returning some of the value generated to shareholders after announcing a $7B stock buyback program in 2025, and a 30% dividend increase. Overall, this was an impressive quarter.
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What The Market Is Telling Us
GE Aerospace’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 8.4% on the news that the company reported a nice 'beat and raise 'quarter.' GE Aerospace beat analysts' revenue and EPS expectations. Notably, the aerospace business recorded "double-digit growth in orders, operating profit, and free cash flow." Management observed encouraging trends as air traffic growth stayed positive, with departures up 9% year to date. The company also raised its guidance for full-year revenue growth, operating profit, and EPS. Zooming out, we think this was still a decent quarter, showing the company is staying on track.
GE Aerospace is up 19.2% since the beginning of the year, and at $201.06 per share, has set a new 52-week high. Investors who bought $1,000 worth of GE Aerospace’s shares 5 years ago would now be looking at an investment worth $2,135.
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