GE Aerospace Rises 19.9% YTD: Is the Rally Still Worth Chasing?

GE Aerospace’s GE investors have been witnessing some short-term gains from the stock of late. Shares of the leading manufacturer of jet engines have gained 19.9% in the year-to-date period, outpacing the S&P 500 composite’s and the industry’s growth of 13.3% and 6.9%, respectively. Other industry players, like Howmet Aerospace Inc. HWM and Textron Inc. TXT, have returned 41% and 0.5%, respectively, over the said time frame.

GE Outperforms the Industry & S&P 500

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Closing at $369.43 yesterday, the stock is trading below its 52-week high of $388.84 but significantly higher than its 52-week low of $263.80. The stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.

GE Shares’ 50-Day and 200-Day SMA

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Factors Favoring the Company

GE Aerospace is benefiting from a growing installed base and higher utilization of engine platforms, driven by strong momentum and growth across commercial & defense sectors. Solid demand for LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is proving beneficial for the Commercial Engines & Services segment.

In the second quarter of 2026, GE Aerospace’s engine deliveries within this segment surged 26% from the prior-year quarter, indicating better throughput as it works through customer demand. The Commercial Engines & Services segment’s revenues and orders jumped 27% and 18%, respectively, on a year-over-year basis in the second quarter.

In the first six months of 2026, the company secured several major engine orders and service agreements. Among major awards, GE secured GEnx engine orders from United Airlines and Delta Air Lines for their Boeing 787 Dreamliners. It also secured LEAP engine orders from American Airlines and Copa Airlines for their narrowbody fleet.

Growing popularity for the company’s propulsion & additive technologies, critical aircraft systems and aftermarket services in the defense sector is driving the Defense & Propulsion Technologies segment’s performance. In the second quarter, revenues from GE’s Defense & Systems were up 12% on growth in both services and equipment, including unit deliveries rising 7%. Propulsion & Additive Technologies revenues grew 23%, led by Avio Aero.

In the first half of the year, it received a contract from Turkish Aerospace Industries (“TAI”) to continue integrating its F404 engine into Türkiye's Hurjet jet trainer. The company also clinched a $1.4 billion deal for T408 engines to support the U.S. Marine Corps’ CH-53K helicopter fleet in the same period.

GE remains committed to rewarding its shareholders through dividends and share buybacks. In the first six months of 2026, GE paid dividends of $873 million and repurchased shares worth $4.2 billion. Also, the company raised its dividend by 30.6% to 36 cents per share in February 2026.

Near-Term Headwinds Prevail

GE Aerospace has also been dealing with the adverse impacts of high costs and operating expenses. In second-quarter 2026, its cost of sales (comprising costs of equipment and services sold) surged 26.7% year over year to $8.7 billion. While selling, general and administrative expenses increased 10.9% to $1.1 billion, research and development expenses rose 28.1% to $460 million. In the quarter, the company’s operating profit margin contracted 130 basis points to 21.7%.

The rising debt level remains another concern. Exiting the second quarter, GE’s total borrowings were $19.2 billion. The figure comprised $2 billion of short-term borrowings and $17.2 billion of long-term borrowings.

Valuation Remains an Overhang

GE Aerospace is trading at a forward 12-month price-to-earnings (P/E) ratio of 43.08X, higher than the industry average of 34.48X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours.

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While its peer, Textron, is trading cheaper compared with GE, Howmet Aerospace is trading at a premium. Notably, Textron and Howmet Aerospace are currently trading at 12.50X and 49.81X, respectively.

Earnings Estimate Revision

The Zacks Consensus Estimate for GE’s 2026 earnings has increased 5.1% to $7.86 per share over the past 60 days, indicating year-over-year growth of 23.4%. The consensus mark for 2027 earnings increased 3.7% to $8.99 per share, indicating a year-over-year increase of 14.4%.

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Final Take on GE

Persistent strength in the commercial and defense aerospace markets, driven by solid build rates and a robust defense budget, bode well for GE Aerospace in the quarters ahead. However, rising operating expenses, high debt levels and premium valuation are limiting this Zacks Rank #3 (Hold) company’s near-term prospects.

While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains and provide a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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