GE Aerospace’s third quarter results exceeded Wall Street’s expectations for both revenue and adjusted earnings, but the market responded negatively, reflecting concerns over margin compression. Management attributed the sales growth to robust demand in its commercial services segment and improving material availability, which allowed for higher engine deliveries. CEO Larry Culp highlighted that the FLIGHT DECK operating model contributed to operational momentum, stating, “We’re making meaningful progress to accelerate delivery of our services and products to meet robust customer demand.” However, operating margins declined year-over-year, driven by increased investments and higher costs.
Is now the time to buy GE? Find out in our full research report (it’s free for active Edge members).
GE Aerospace (GE) Q3 CY2025 Highlights:
- Revenue: $12.18 billion vs analyst estimates of $10.9 billion (36.2% year-on-year growth, 11.7% beat)
- Adjusted EPS: $1.66 vs analyst estimates of $1.47 (13% beat)
- Adjusted EBITDA: $2.60 billion vs analyst estimates of $2.49 billion (21.4% margin, 4.7% beat)
- Operating Margin: 18.9%, down from 20.3% in the same quarter last year
- Market Capitalization: $330 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From GE Aerospace’s Q3 Earnings Call
- Sheila Kahyaoglu (Jefferies) asked whether services growth was driven more by volume unlock or pricing. CFO Rahul Ghai explained that improved material availability boosted volumes and that stronger demand, combined with increased shop visits and spare part sales, drove outperformance.
- Douglas Harned (Bernstein) questioned the sustainability of LEAP services margin improvement through 2028. CEO Larry Culp and Ghai responded that ongoing operational gains, cost reductions, and durability improvements give them confidence in the trajectory, though significant work remains.
- Myles Walton (Wolfe Research) inquired about the balance between shareholder returns and potential M&A. Culp noted the primary focus remains on reinvestment and disciplined capital allocation, but acknowledged capacity for strategic acquisitions as opportunities arise.
- Seth Seifman (JPMorgan) asked what is driving spare parts growth beyond departure trends. Ghai cited pent-up shop visit demand, increasing work scopes, and strong material availability as the main factors, with expectations for continued outperformance relative to underlying flight activity.
- Scott Deuschle (Deutsche Bank) queried about 2026 growth outlook. Ghai said growth will normalize compared to 2025, with double-digit increases expected in services and moderate margin expansion, tempered by 9X engine program costs.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely tracking (1) the pace at which GE Aerospace can improve LEAP engine turnaround times and shop visit capacity, (2) execution on supply chain investments and the rollout of new durability kits, and (3) ongoing strength in the defense segment as backlog is fulfilled. Additional focus will be placed on management’s ability to offset inflationary and program ramp-up costs while maintaining service reliability for customers.
GE Aerospace currently trades at $313.25, up from $302.82 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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