To The Moon

$GE Aerospace(GE)$ is scheduled to report its fiscal Q2 2025 earnings on Wednesday, 17 July 2025, before market open.

EPS: Analysts expect GE Aerospace to report an EPS of approximately $1.42 to $1.43, representing a year-over-year increase of about 18% to 19.2% from $1.20 in Q2 2024. Some estimates are as high as $1.50.

Revenues: Projected revenues are around $9.7 billion, an increase of approximately 18% from $8.22 billion in the year-ago quarter.

Summary of GE Aerospace (GE) Fiscal Q1 2025 Earnings

GE Aerospace kicked off 2025 with a strong first quarter, demonstrating robust growth in both orders and revenue, primarily driven by its commercial services segment. Despite ongoing macroeconomic challenges and tariff impacts, the company maintained its full-year guidance.

Total Orders: $12.3 billion, up 12% year-over-year.

Total Revenue (GAAP): $9.9 billion, up 11% year-over-year. Adjusted revenue also increased by 11% to $9.0 billion.

Profit (GAAP): $2.2 billion, up 13% year-over-year. Operating profit surged 38% to $2.1 billion, with operating profit margin expanding by 460 basis points to 23.8%.

Adjusted EPS: $1.49, a significant 60% increase year-over-year, exceeding analyst expectations of around $1.25-$1.27.

Cash Flow: Cash from operating activities was $1.5 billion (down 5%), and free cash flow was $1.4 billion (down 14%), primarily due to timing-related working capital shifts.

Segment Performance

Commercial Engines & Services (CES): This was the main growth driver, with orders up 15% and revenue up 14%. Services revenue within CES grew 17%, fueled by over 20% growth in spare parts and 11% in internal shop visits. Operating profit for CES jumped 35%.

Defense & Propulsion Technologies (DPT): Saw modest growth, with revenue up 1% and orders flat. However, operating profit increased by 16%.

Backlog: The company reported a robust commercial services backlog exceeding $140 billion, providing strong visibility for future revenue. Total backlog is over $170 billion.

Supply Chain & Tariffs: GE Aerospace acknowledged persistent supply chain challenges but noted an 8% sequential increase in material inputs from priority suppliers, indicating some progress. The company is actively mitigating tariff impacts through operational optimization, trade programs, cost control, and pricing actions, aiming to reduce tariff costs to roughly $500 million.

Guidance Reaffirmed: GE Aerospace reaffirmed its full-year 2025 guidance, projecting low double-digit adjusted revenue growth, operating profit of $7.8-$8.2 billion, adjusted EPS of $5.10-$5.45, and free cash flow of $6.3-$6.8 billion.

Factors and Metrics to Watch for GE Aerospace (GE) Fiscal Q2 2025 Earnings:

Investors will be looking for continued momentum and execution on key strategic initiatives. Here are the critical factors and metrics to monitor:

1. Commercial Aviation Market Trends:

Flight Departures: While Q1 saw a 4% increase in departures, GE Aerospace had already embedded a more cautious outlook for full-year departures (low-single-digits, down from mid-single-digits), reflecting a slower second half, particularly in North America. Any deviation from this revised expectation will be crucial.

Airline Traffic & Demand: Continued strength in global air travel and airline profitability directly translates to demand for engines and aftermarket services. Updates on airline capacity plans and passenger traffic will be key.

Fleet Utilization: Higher fleet utilization leads to more flight hours, which drives demand for maintenance, repair, and overhaul (MRO) services – a high-margin business for GE Aerospace.

2. Commercial Services Performance (Aftermarket):

Spare Parts & Shop Visits: This remains the primary growth engine. Investors will look for continued double-digit growth in services revenue, specifically from spare parts sales and internal shop visits. Any signs of easing in the backlog for engine overhauls or increased spare parts availability would be positive.

LEAP Engine Aftermarket: The LEAP engine fleet is expected to more than double by the end of the decade. Q1 saw over 60% growth in LEAP external shop visits. Continued strong aftermarket growth for LEAP engines will be a key indicator.

Backlog Conversion: While the backlog is robust, the company had noted a lag in converting orders to revenue due to supply chain dynamics. Any signs of accelerating this conversion will be viewed favorably.

3. Supply Chain Health & Production Output:

Material Inputs: The sequential improvement in material inputs in Q1 was a positive sign. Investors will look for continued improvement and consistency in supplier shipments, as this directly impacts the company's ability to deliver new engines and provide spare parts.

Engine Deliveries: While CES equipment sales rose in Q1, unit deliveries were down. Q2 performance in new engine deliveries, particularly for LEAP, will be watched to see if the increased material inputs translated into higher output. The company expects 15% to 20% growth in LEAP deliveries in 2025.

4. Tariff Impacts and Mitigation:

Cost Management: GE Aerospace highlighted actions to reduce tariff costs, including leveraging trade programs, controlling costs, and pricing actions. Investors will look for updates on the effectiveness of these measures and the actual financial impact of tariffs.

Pricing Actions: Commentary on the implementation and reception of price increases for spare parts and new equipment will be important in assessing the company's ability to offset inflationary pressures and tariffs.

5. Defense & Propulsion Technologies (DPT):

Program Execution: While smaller than the commercial segment, steady performance in the DPT segment is important. Updates on existing contracts (like the F110 engine contract with the U.S. Air Force) and progress on advanced engine development (T901, X102) will be watched.

Government Spending & Budgets: Changes in defense spending priorities or delays in program funding could impact this segment.

6. Full-Year Guidance Reaffirmation/Revision:

Confidence in Outlook: Given the strong Q1 and the reaffirmation of guidance, investors will be looking for continued confidence in the full-year targets for revenue, operating profit, EPS, and free cash flow. Any adjustments to this guidance, especially related to departures or supply chain, will be critical.

7. Cash Flow Generation:

Free Cash Flow (FCF): Despite the Q1 decline due to working capital, FCF generation remains a key metric for GE Aerospace. Investors will want to see FCF improve in Q2 as the company scales production and manages working capital effectively.

GE Aerospace (GE) Price Target

Based on 15 analysts from Tiger Brokers offering 12 month price targets for GE Aerospace in the last 3 months. The average price target is $260.27 with a high forecast of $300.00 and a low forecast of $196.11. The average price target represents a -1.66% change from the last price of $264.67.

Technical Analysis - Exponential Moving Average (EMA)

GE has shown strong positive momentum from the RSI and the bulls are well in control and their attempt to make a daily uptrend continuation looks like going to proceed well into its earnings.

What we need to watch is any surprise news on the tariffs which could derails demand for the next quarter as airlines traffics should be doing well as we are also getting earnings from some of the major U.S. airlines, this could boost GE outlook for 2025.

I will not be getting into GE as there is still some headwinds that GE need to show that they are on track to improving them, for example, operational execution.

Summary

GE Aerospace's Q2 2025 earnings call will provide critical insights into its operational execution, particularly its ability to navigate supply chain constraints and mitigate tariff impacts while capitalizing on robust demand in the commercial aerospace aftermarket. Continued strength in services and progress in new engine deliveries will be key to sustaining its growth trajectory.

Appreciate if you could share your thoughts in the comment section whether you think GE would be able to provide an improvement in its operational execution and also showing strength in sustaining its growth trajectory.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.