GE Aerospace’s stock has staged a 76% rally this year – one that ranks No. 9 in the S&P 500.
For the first time in 25 years, GE Aerospace’s stock has closed at an all-time high, in a reflection of the company’s major turnaround and its ability to capitalize on the booming defense and airline markets.
At the closing bell, GE Aerospace’s stock (GE) ended at $292.97 a share with a gain of $6.19 a share, or 2.16% on the day’s trading.
It’s the first first new high for GE shares (GE) since a $287.15 close achieved in August 2000 by predecessor General Electric Co., according to Dow Jones Market Data.
On Tuesday, GE Aerospace’s stock opened at $289.87 a share, above its record close in 2000, and hit a high of $294.74 a share and a low of $288.84 a share in the course of the day’s trading.
The stock rose fractionally to $293.11 in after-hours trading on Tuesday.
The stock’s year-to-date gain of 75.7% ranks ninth in the S&P 500 SPX and marks a continuation of the company’s remarkable comeback from its 10-year low of $27.33 a share, hit in May 2020.
GE Aerospace’s business is humming on multiple fronts, with the company benefiting from demand for its commercial jet engines and from a buildup in military hardware due to conflicts around the globe. The sustained optimism around the stock indicates that Wall Street doesn’t expect these growth drivers to let up.
The stock has stood out as a way for investors to get exposure to increased military spending around the world driven by conflicts in the Middle East and Ukraine, as well as by China’s growing military might.
Art Hogan, chief market strategist at B. Riley Wealth, said GE Aerospace has set itself apart from rivals as one of the “most modern” among aerospace companies.
“Most of the other drone players are much smaller,” Hogan said. “Not only is military spending remaining high, it’s moving in a new direction” toward drones, he added.
GE Aerospace has an alliance with Kratos Defense & Security Solutions Inc. (KTOS) as part of its drone offerings.
Meanwhile, spending has increased in the eurozone, with Germany in debt for the first time since World War II due to its weapons buildup, Hogan noted.
General Electric, the predecessor to GE Aerospace, broke itself up with the spinoffs of GE HealthCare Technologies Inc. (GEHC) in 2023 and GE Vernova Inc. (GEV) in 2024. The move has helped GE Aerospace grow its appeal as more of a pure-play aerospace investment.
While international defense spending has been a driver, the company also stands to capitalize on U.S. demand. Research firm CFRA forecasts 4% to 5% annual growth in U.S. defense spending between 2024 and 2026. That’s well above the trailing 10-year average annual growth rate of 1%.
Sam Stovall, a market strategist for CFRA, said his firm maintains a neutral stance on the aerospace and defense sector broadly but sees stronger growth ahead in commercial aviation, despite the threat of inflation that could eat into profits.
In terms of commercial aerospace, most global airlines are experiencing “record utilization” of single-aisle jets thanks to strong demand for global travel, he said.
“We expect wide-body utilization will fully recover over the next 12 months as tourists and businesses have taken advantage of loosened international travel restrictions,” Stovall said.
While back orders for planes remain strong, regulatory and execution challenges at Boeing Co. (BA) and at global supply-chain partners have prevented production from fully recovering to meet healthy demand, he noted.
GE Aerospace has said its technologies are standing out with customers. Among those technologies are composite fan blades that can help more planes leave on time, fly further and improve fuel burn.
The aerospace aftermarket parts business also offers opportunity for the company, analysts have said.
Despite the enthusiasm for its stock, the consensus view for GE Aerospace’s third-quarter earnings has stayed at $1.42 a share since last June, when it was raised from $1.37 share. The company’s second-quarter earnings came in well ahead of the consensus view, marking GE Aerospace’s 11th profit beat in a row.
Vertical Research analyst Robert Stallard zeroed in on the company’s “spectacular” 30% growth in its commercial engines unit during that quarter, as well as stronger-than-expected 7% growth in its defense unit.
