MW GE Aerospace's stock flies toward an 18-year high after strong earnings, outlook
By Tomi Kilgore
GE to buy back more stock in 2025 and raise its dividend by 30%, and provided an upbeat full-year earnings outlook
Shares of GE Aerospace surged toward an 18-year high early Thursday after fourth-quarter profit and revenue beat expectations by healthy margins, fueled by strength in the commercial engines business.
The company also provided an upbeat earnings outlook for 2025, and said it was going to buy back more stock and boost its dividend by 30%.
"GE Aerospace delivered a strong finish to 2024 given robust demand for our services and products with fourth quarter orders up 46%, EPS more than doubling, and free cash flow increasing over 20%," said Chief Executive Lawrence Culp.
"Looking to 2025, we expect double-digit [percentage] revenue and EPS growth with greater than 100% free cash flow conversion," Culp said.
The stock $(GE)$ flew 5.2% in premarket trading, putting it on track to open around the highest prices seen since October 2007.
Net income rose to $1.9 billion, or $1.75 a share, from $1.59 billion, or $1.44 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share rose 103% to $1.32, well above the FactSet EPS consensus of $1.04.
Revenue grew 14.3% to $10.81 billion, to beat expectations of $9.49 billion, as orders jumped 46% to $15.5 billion.
In Commercial Engines and Services, revenue climbed 19% to $7.65 billion, above the FactSet consensus of $7.32 billion, amid expanded shop visits, higher spare parts and prices. Orders soared 49.8% to $12.95 billion, with growth in both services and equipment.
Revenue from defense and propulsion technologies was up 4.4% to $2.52 billion, topping expectations of $2.50 billion. It was driven by higher defense deliveries and prices. Orders increased 22.5% to $2.84 billion.
Free cash flow rose 20.6% to $1.52 billion to beat expectations of $1.18 billion.
For 2025, the company expects adjusted EPS of $5.10 to $5.45, which at the midpoint would represent 14.7% growth from 2024 adjusted EPS of $4.60. Revenue is expected to grow in the low double-digit percentage range, while free cash flow is expected to rise to between $6.3 billion and $6.8 billion.
GE said it returned more than $6 billion to shareholders in 2024. It expects to buy back $7 billion worth of its stock in 2025.
A 30% increase to the current annual dividend rate of $1.12 would lift the stock's dividend yield to 0.77% from the current 0.59%. To put that in perspective, the yield of the Industrial Select Sector SPDR ETF XLI, of which GE is a component, is 1.35%, while the implied yield for the S&P 500 index SPX is 1.24%.
GE's stock has soared 81.8% over the past 12 months, while the industrial ETF has rallied 23.9% and the S&P 500 has advanced 25.1%.
-Tomi Kilgore
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(END) Dow Jones Newswires
January 23, 2025 07:35 ET (12:35 GMT)
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