GE Aerospace delivered the beat-and-raise quarter the sector needed. Expectations were running high into the print, though, and investors, it seems, still are nervous. Shares were down on the day.
The company reported Thursday morning that second-quarter earnings per share (EPS) were $2.02, with sales of $12.6 billion. Wall Street was looking for EPS of $1.86 from sales of $11.9 billion.
A year ago, GE Aerospace announced earnings per share of $1.66 from sales of $11 billion. Orders came in at $16.5 billion, ahead of sales, and up 17% year over year.
Guidance went up. For 2026, GE Aerospace now sees sales rising by "high-teens" percentage, up from 10% to 12%. Earnings per share are expected to be between $7.65 and $7.85, up from a prior range of $7.10 to $7.40.
Analysts currently project 2026 earnings per share of $7.56.
Vertical Research Partners analyst Rob Stallard wrote it was "another strong growth quarter" and "engines still firing," in a Thursday report. Still, GE stock dropped 4.1% to $345.73, while the S&P 500 fell 0.5% and the Dow Jones Industrial Average lost 0.2%.
The reaction is a little surprising, but investors haven't been sure what to do with aerospace stocks lately. GE Aerospace caused a little consternation for investors by not changing guidance when it reported first-quarter results in April. (Shares dropped almost 6%.)
The company could hardly be blamed. Numbers were released in the midst of a new war in the Middle East, high oil prices, and jet fuel shortages that threatened demand for air travel.
Investors ignored GE Aerospace's conservatism. After trading below $275 after first-quarter earnings, with fighting raging in Iran, shares hit a 52-week high in early July and, entering Thursday trading, were up more than 30% from post-Iran-war lows.
That had expectations high going into the earnings report, for some good reasons. "The company has been signaling a strong second quarter 2026, led by growth in its services and spare part sales," wrote RBC analyst Ken Herbert in a preview report.
"The company has consistently indicated that it does not expect any long-term demand destruction as a result of the Iran war, but we believe investors will be focused on any changes in the midterm outlook (aircraft retirements, cycles, engine deliveries), the revised 2026 outlook, and supply chain commentary," he added.
For the midterm, GE Aerospace expects to generate about $11.5 billion in 2028 operating profit. Wall Street is way beyond that level, projecting $13.2 billion.
GE didn't update the 2028 outlook in its news release. It might be waiting for next week's Farnborough Air Show. Industry executives typically meet at the biennial air show to order new jets and discuss industry trends.
Regardless of the stock reaction and coming updates, the quarter looks strong. Jefferies analyst Sheila Kahyaoglu called the numbers "worthy of the multiple."
GE stock trades for about 44 times earnings expected over the coming 12 months, up from about 42 times a year ago. The S&P 500 trades for about 21 times.
The multiple shows a lot is expected from GE Aerospace. The company delivered on Thursday. It will have to keep delivering to maintain high stock momentum.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
July 16, 2026 16:15 ET (20:15 GMT)
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