GE Aerospace sees strong Q4 results. But watch out for these headwinds.
GE Aerospace announced its fourth quarter and 2024 results earlier Thursday. The jet engine and aerospace parts maker gave a positive outlook for its performance in early December. GE stock has been building the right side of the foundation.
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GE Aerospace (G.E) on December 6th It expects to achieve its full-year 2024 guidance for high-single-digit revenue growth, operating profit of $6.7 billion to $6.9 billion, and free cash flow of $5.6 billion to $5.8 billion.
The company said new engine results, interior shop visits and spare parts were delayed by materials from suppliers. GE has made progress by increasing its material input sequentially, but it is still below demand. The company is making a trade-off between original items and aftermarket demand with the available material. Meanwhile, demand for GE Aerospace’s aftermarket remains strong, with strong orders and shop visit advances outpacing quarterly output.
GE may limit growth for some parts of its business in 2024, but demand will push forward, he said.
of Boeing (B.A) last fall’s strike caused delays in shipments of GE’s LEAP 1-B jet engine, while other supplier bottlenecks blocked new engine deliveries.
Still, long-haul aircraft provide growth for GE’s aftermarket business, which has higher margins than the original equipment segment.
The company’s backlog for Defense and Propulsion Technology (DPT) rose to $18 billion from $1 billion last year. However, there are a few headwinds that will affect performance after the middle of the year.
GE Aerospace noted that output of high-margin marine engines was challenged, leading to an unfavorable engine mix. Uncertainty about the US government budget has prompted GE to fund research and development on its own. The company expects lower investments in the Catalyst engine in 2025 as certification approaches.
For Q4, FactSet expects GE Aerospace to report earnings of $1.04 per share on revenue of $9.49 billion.
However, the comparison from a year ago has been muddied by the breakup of General Electric last April, which saw its jet engine and energy businesses emerge as a standalone company.
GE Vernova (GEVShares of General Electric Power rose to new highs on Wednesday, despite missing earnings.
Boeing’s earnings are due on January 28th.
2025 preview
GE Aerospace said in the update that it is positioned to deliver continued growth in revenue, profit and free cash flow through 2025.
For its Commercial Engines and Services (CES) business, GE Aerospace Services expects low-double-digit growth from “significant” shop visit demand, growth in LEAP services, mature fleets for longer flights and pricing. The manufacturer predicts that parts sales will keep pace with overall service growth. GE predicts that original equipment (OE) services will outperform, with 15% to 20% growth in output of the LEAP engine family.
The company expects defense revenues to grow in the mid-high single-digits, with profits outpacing revenue gains.
GE Aerospace will build a stock base.
GE stock is building to the right with a 194.80 buy point.
On January 13, shares rebounded from the 200-day line. On January 14, GE Aerospace pushed above its 50-day moving average and broke a downtrend, providing an early entry.
GE stock fell 0.3% to 186.90 Wednesday morning.
GE Aerospace grows 12 percent through 2025.
You can follow Harrison Miller on X/Twitter for more stock news and updates. @IBD_Harrison
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GE Vernova, a huge S&P 500 winner, rose despite missing earnings.