Al Root
Both GE Aerospace and GE Vernova published their annual reports on Thursday and there are messages in each for investors: When things are good, as they are right now, it's important to stay "humble and hungry."
It's always a good idea for investors to scan an annual report. ( Barron's has suggested ways to read an annual report, filed on a Form 10-K, in 10 minutes). There are myriad tidbits about a company's business, market, risks, competitors, and financials.
There are also messages from leadership. In this case, GE Aerospace CEO Larry Culp and GE Vernova CEO Scott Strazik. Those are also useful for investors to review so they understand their companies' strategic direction and, of course, who is leading them.
In Vernova's annual report, Strazik explained how the global electricity market is expected to develop. "Today, only about 20% of energy comes from electricity," he said, adding that share will rise by 50% by 2050. That means a lot more demand for GE Vernova products for a long time. "We see this as the emergence of an investment supercycle that parallels other multi-decade cycles such as globalization or the advent of the Internet."
It's a bullish outlook that investors have embraced. Shares of GE Vernova have risen roughly fivefold since the company was spun out of GE, now GE Aerospace, in early 2024, making GE Vernova, worth almost $200 billion, one of the most valuable industrial companies in America.
GE Aerospace shares have roughly doubled over that span. It's worth north of $300 billion, making it the most valuable publicly traded industrial stock in the S&P 500.
Success hasn't gone to GE Vernova's head, though. Strazik remains focused on staying "humble and hungry" as he put it. Keys to that: His company maintains a rock-solid investment-grade balance sheet, returns capital to shareholders, and continues to improve margins via cost-cutting.
GE Vernova's profit margins expanded almost three percentage points in 2025. They are expected to expand another 12 percentage points between 2025 and 2028. The company also is investing $11 billion in its manufacturing footprint and R&D over that span, to maintain its leadership in power geneneration technology.
GE Aerospace takes a similar approach, investing some $3 billion in R&D annually.
It can take a while for investments to yield fruit. "The CFM LEAP program broke even for the first time in 2025, roughly nine years after it entered service, and it will take two decades since the inception of the program for us to recover our initial investment," wrote Culp. "We wouldn't have it any other way."
The CFM LEAP has a market share north of 70% on new single-aisle jets.
Culp, a longtime advocate of lean manufacturing techniques pioneered in Japan, also is laser-focused on improving operations, explaining how the turbine center frame, a part on the LEAP, improved its on-time delivery from 20% to 96% over the past couple of years.
It all adds up. GE Aerospace's operating profit increased 25% in 2025 to $9.1 billion, and free cash flow jumped 24% to $7.7 billion, all while backlog by nearly $20 billion to about $190 billion.
The message for investors is clear: It's good to have a strong operating environment. When that's paired with strong business execution, strong stock returns follow.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
January 30, 2026 06:05 ET (11:05 GMT)
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