GENERAL ELECTRIC COMPANY (GE): what the price assumes

In the published model solve dated 2026-Q2, anchored at $342.91, GENERAL ELECTRIC COMPANY (GE) is priced for today's economics sustained for ~12.7 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/GE

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 11.2% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=11)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• About three quarters of revenue comes from commercial engines and services, and the annual report puts services at "75% of total CES revenue", so the money is made maintaining engines already flying rather than shipping new ones.
• The demanding part of owning this is what the price asks for: roughly 40 times a year's operating income needs the recent pace of profit growth to persist for something like 13 years, and only around 15% of comparably fast growers have held such a pace for a decade.
• Supplier material input and shop visit throughput are the two things to watch, both named by management when it raised full-year 2026 guidance across the board on July 16, 2026.

Bull Case

For a company whose order book management describes as over 210 billion dollars, GE Aerospace borrows remarkably little. Borrowings stood near 20.3 billion dollars at the end of March against liquid holdings of roughly 11.0 billion. Interest and other financial charges came to 215 million dollars in the June quarter, set against 3,132 million of combined segment profit in the same three months. The share count has been drifting lower by about 1.1% a year since early 2022. Companies that fear the next stretch do not retire stock.

What that balance sheet funds is unusual for a manufacturer. The engine sale is closer to a customer acquisition cost than to the profit event. The profit arrives afterwards, across decades, through the maintenance stream: the 10-K describes the business as "(MRO) of engines and the sale of spare parts, and we offer services under a variety of arrangements such as long-term service agreements, spare parts agreements or time and material contracts." It then puts the weight plainly, noting that "CES was approximately 73% of total GE Aerospace revenue for the year ended December 31, 2025, with services representing 75% of total CES revenue." Sell an engine once, service it for thirty years.

The economics that produces are visible in the segment table. Commercial engines and services turned 9,731 million dollars of June-quarter revenue into 2,657 million of segment profit, a 27.3% margin, while defense and propulsion technologies turned 3,443 million into 475 million, a 13.8% margin. Put that commercial margin next to the cohort it competes in and it stands up: HEI runs a 23.5% operating margin, HON 21.2%, and RTX 10.9%. TDG, at a 46.5% operating margin, shows where pure aftermarket economics can go, which is the direction this mix keeps moving as the installed fleet ages.

The defense side is the quieter argument. A 13.8% segment margin is above what the large primes report on their whole businesses: LMT at 9.9%, GD at 10.2%, NOC at 11.6%, LHX at 10.2%. Engines and propulsion sit at a better point in the defense value chain than airframes and integration, because the same time-on-wing economics apply whether the aircraft is a narrowbody or a trainer.

The forward book keeps refilling. The annual report records that "RPO increased $18.9 billion, or 11%, from December 31, 2024, primarily at Commercial Engines & Services", driven by engines going under long-term service agreements and by orders outrunning revenue recognition. The bear will point out that commercial margins compressed 160 basis points in the June quarter, and that is true. It is also what laying down an annuity looks like: new engines ship at thin margins so that the parts and shop visits arrive later at fat ones. The compression is the investment, showing up where investments show up.

Bear Case

Four families of valuation method get pointed at this company and three of them cannot get near the price. The asset-value methods land at less than a third of it. The earnings-power methods, which capitalize what the business earns now and credit no growth at all, land near a quarter. Peer multiples do better and still leave the price roughly 43% above what that family of method supports. Only the forward-growth methods reach today's level, and they reach it by carrying the recent past forward.

Their mechanics are worth knowing, because they are the same bet stated twice. The cash-flow method that clears the price starts from a free cash flow base near 8.2 billion dollars, compounds it at 22% a year, then settles to 4% forever. The method that clears it most comfortably holds today's price-to-sales multiple flat into its terminal year and lets revenue compound at the same 22%. Neither is unreasonable. Neither is independent evidence, either, because both are extrapolation wearing different clothes.

Read the price backwards and the requirement is specific. Growth pinned at the fastest rate the business can fund out of its own cash flow, roughly 25% a year, has to persist for something like 13 years before the arithmetic meets today's level. The rate is not the stretch. GE Aerospace has recently delivered comparable growth, and the June quarter delivered more. The duration is the stretch: of companies that have grown that fast, roughly 15% sustained the pace even a decade, and the multiple already sits at the very top of its peer group, well beyond the upper quartile.

What could interrupt it is written in the company's own risk section. Supply is the first constraint, and it is structural rather than cyclical: "Some of our suppliers or their sub-suppliers are limited- or sole-source suppliers", which means a single vendor's quality problem becomes GE's delivery problem. The ramp itself is the second, and the filing does not soften it: "the anticipated significant growth of the LEAP installed base and services in the coming years will require considerable effort". Then there is the demand side, which no amount of execution controls. The 10-K notes that "The airline industry has historically been highly cyclical, and sustained economic growth and political stability in both developed and emerging markets are principal factors underlying long-term air traffic growth". Thirteen years of compounding requires roughly thirteen years without an air-traffic recession, and the industry has not previously managed that.

Cost pressure is already showing. Commercial margins compressed 160 basis points in the June quarter on new-engine mix, investment and inflation, and on tariffs the company says it is "taking measures to control cost and implementing pricing actions to primarily mitigate the remaining impact." Mitigate is the operative word. Price increases into airline customers who are themselves margin-constrained is not a lever that pulls indefinitely.

There is also a piece of this company that has nothing to do with engines. A legacy insurance book of long-term care policies and structured settlement annuities still sits inside the reporting entity, producing 715 million dollars of revenue against 544 million of associated costs in the June quarter. It is small, it is running off, and it is the last piece of the old conglomerate still attached.

The fall would not be unbounded. Roughly 9.1 billion dollars of equity holdings sit outside the operating businesses, a little over 2% of the company's market value, and those survive any operating disappointment. That bounds the downside. It does not begin to cover the premium.

Valuation

Today's price works out to roughly 40 times a year's operating income. That figure only means something once you invert it, and the inversion is unusually concrete here. Hold growth at the fastest rate the business can fund from its own cash flow, about 25% a year, and the price needs that rate to persist for something like 13 years before the numbers meet. Shave a percentage point off the growth assumption and the required horizon stretches by more than two years. The bet is not that GE Aerospace grows fast. It is that it grows fast for a very long time.

The methods split cleanly on whether that is credible. Asset-value approaches land at under a third of the price, and earnings-power approaches, which capitalize current profit without crediting any growth, land near a quarter of it. Peer multiples close most of the gap and still leave the price about 43% above where that family of method sits. Only the forward-growth methods reach the price at all, which makes this a durability premium rather than an earnings premium: the static frames are not disagreeing about the quality of the business, they are structurally unable to price a service annuity that has not been billed yet.

The two methods that do reach it get there in related ways. One starts from a free cash flow base near 8.2 billion dollars, compounds at 22% before fading to 4% in perpetuity, and discounts at 9.2%. The other holds today's price-to-sales multiple unchanged into its terminal year while revenue compounds. The peer-multiple approach, by contrast, blends a static sector reference with the company's own trailing multiple, and because the sector reference is less than half of what this company trades on, that blend lands well under the price by construction.

The cohort makes the same point from the other direction. On filed segment figures, commercial engines and services earned a 27.3% margin in the June quarter and defense and propulsion technologies 13.8%, against total revenue of 45,855 million dollars for the 2025 year. HEI carries a 23.5% operating margin and HON 21.2%, so the commercial segment is genuinely at the top of its cohort on profitability. The multiple, though, is not near the top of the cohort. It is beyond it, past the upper quartile of the peer distribution, which is what the demanding read reflects.

None of this is a balance-sheet story, which is the point worth ending on. Borrowings near 20.3 billion dollars sat against liquid holdings around 11.0 billion at the end of March, interest charges ran 215 million dollars in the June quarter against 3,132 million of combined segment profit, operations generated 3,258 million dollars of cash in that same quarter, and the share count keeps falling. If this investment disappoints, it will not be because the company ran out of money. It will be because the thirteenth year of compounding never arrived.

Catalysts

The most recent information event was July 16, 2026, and it was a good one. Second-quarter revenue came in at 13,349 million dollars, up 21% on the year, with reported profit of 2,801 million, up 17%, and continuing earnings per share of 2.30 dollars, up 23%. Cash from operating activities reached 3,258 million dollars, up 39%. Orders totalled 16.5 billion dollars, up 17%.

Management raised full-year 2026 guidance across every line it guides. The commercial segment is now expected to grow revenue around 20% for the year, up from a prior mid-teens expectation, with services growth revised to the low 20s. Segment operating profit guidance for that business moved to a range of 10.25 to 10.35 billion dollars from a prior 9.6 to 9.9 billion. For a company whose valuation rests on duration rather than rate, a guidance raise of that shape matters less for the incremental dollars than for what it says about visibility into the back half.

The operating detail underneath is where the constraint sits. Total engine deliveries rose 31% in the first half with LEAP deliveries up 41%, and management attributed that to material input from priority suppliers rising double digits both sequentially and year on year. Commercial wins in the quarter included an agreement with Copa Airlines for up to 120 LEAP-1B engines, an F404 award from Turkish Aerospace for its advanced jet trainer programme, and CT7 engines for Leonardo Helicopters. Each new engine placed is a service stream that starts billing years later, which is why order announcements read as revenue events at this company long before they are.

Peer Cohorts (Per Segment, With Filing Citations)

Commercial Engines & Services (reported)

• RTX (RTX CORPORATION)
• FY2025 10-K: …aerospace OEM and aftermarket maintenance contracts and on our defense contracts to design, develop, manufacture, or modify complex equipment. Our customers are in the public and private sectors, and our businesses reflect an extensive geographic diversification that has evolved with continued globalization.…
• FY2025 10-K: …products and services. Collins Aerospace is a leading global provider of technologically advanced aerospace and defense products. Collins' solutions include aftermarket services for civil and military aircraft manufacturers, commercial airlines, and regional, business, and general aviation, as well as for defense and…
• HON (Honeywell International Inc)
• FY2025 10-K: …technology, equipment, engineering, catalysts, adsorbents, and services through end-to-end solutions to its customers enabled by the convergence of its domain expertise and vast installed base, combined with the Honeywell Forge platform. Forge provides connectivity, data integration, and software solutions powered by…
• FY2025 10-K: …construction activity (including retrofits and upgrades), lower capital spending and operating expenditures on projects, changes in the competitive landscape, including new market entrants and new technologies, and fluctuations in inventory levels in distribution channels. • Energy and Sustainability Solutions…
• TDG (TransDigm Group Incorporated)
• FY2025 10-K: …that they will have a reduced incentive to certify another supplier because of the cost and time of the technical design and testing certification process. In addition, we believe that the availability, dependability and safety of our products are reasons for our customers to continue long-term supplier…
• FY2025 10-K: …handling, delivery systems and electronic components used in the generation, amplification, transmission and reception of microwave signals. Primary customers of this segment are engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies and repair depots.…
• HEI (HEICO CORPORATION)
• FY2025 10-K: …and business aircraft, aircraft engines and related components and equipment. Due in large part to our established industry presence, we enjoy strong customer relations, name recognition and repeat business. We sell our products to a broad customer base consisting of domestic and foreign commercial and cargo…
• FY2025 10-K: …misappropriation or obsolescence from occurring by developing new techniques and improving existing methods and processes, which we will continue on an ongoing basis as dictated by the technological needs of our business. We believe that, based on our competitive pricing, reputation for high quality, short lead time…
• MOG-A (MOOG Inc.)
• FY2025 10-K: …and existing fleets. Commercial Aircraft. We design, manufacture and integrate primary and secondary flight-critical control systems and products for various commercial aircraft including widebody, narrowbody, business jets and regional jets for both OEM and aftermarket customers. Our large commercial production…
• FY2025 10-K: …• Commercial aircraft market - primary and secondary flight controls and components for commercial aircraft. • Space market - satellite avionics, propulsion and positioning controls and components, launcher thrust vector controls and components, as well as integrated space vehicles. In the industrial market, our…
• WWD (WOODWARD, INC.)
• FY2025 10-K: …depots, third-party repair shops, and other end users. 2 Industrial Our Industrial segment designs, produces, and services systems and products for the management of energy in the form of fuel, air, fluids, gases, motion, combustion, and electricity. These products include actuators, valves, pumps, fuel injection…
• FY2025 10-K: …guidance for weapon systems; and • motion control components for integration into comprehensive actuation systems. Most technology development programs begin years before an expected entry to service, such as those for the next generation of commercial aircraft. Other development programs result in nearer-term…

Defense & Propulsion Technologies (reported)

• RTX (RTX CORPORATION)
• FY2025 10-K: …Collins supports government and defense customer missions by providing systems solutions for connected battlespace, test and training range systems, crew escape systems, and simulation and training. Pratt & Whitney is among the world's leading suppliers of aircraft engines for commercial, military, business jet, and…
• FY2025 10-K: …Guidance Enhanced Missiles (GEM-T) and Patriot launchers for international customers and the U.S. Army, $2.1 billion to provide AMRAAM to the U.S. Air Force, U.S. Navy, and international customers, $1.5 billion for low-rate initial production (LRIP) of LTAMDS for the U.S. Army and Poland, $1.2 billion for Iron Dome…
• LHX (L3HARRIS TECHNOLOGIES, INC.)
• FY2025 10-K: …Demand We operate in highly-competitive markets that are sensitive to technological advances. Some of our competitors in each of our markets are larger than we are and can maintain higher levels of expenditures for research and development ("R&D"). We concentrate on the opportunities that we believe are compatible…
• FY2025 10-K: …property damage to us or third parties could also occur. The use of these products in applications by our customers could also result in liability if an explosion, unplanned ignition or fire were to occur. Extensive regulations apply to the handling of explosive and energetic materials, including but not limited to,…
• GD (GENERAL DYNAMICS CORPORATION)
• FY2025 10-K: …Powder propellant capacity; and continued advancement in solid rocket motor production. These initiatives will strengthen supply chain resiliency and support the full lifecycle of critical defense systems. Revenue for the Combat Systems segment was 17% of our consolidated revenue in 2025, 19% in 2024 and 20% in 2023.…
• FY2025 10-K: …set in the contract, such as cost, quality, schedule and performance. Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials. Each of these contract types presents advantages and disadvantages. Typically, we assume more risk…
• NOC (NORTHROP GRUMMAN CORP /DE/)
• FY2025 10-K: …for the U.S. Navy, Japan, and France; • MQ-4C Triton, which provides wide area strategic ISR over vast ocean and coastal regions for maritime domain awareness to the U.S. Navy and Australia; • RQ-4 Global Hawk, which provides high resolution imagery of land masses for theater awareness and strategic ISR to the U.S.…
• FY2025 10-K: …(EO/IR) and acoustic sensors; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR) systems; electronic warfare systems; advanced communications and network systems; advanced microelectronics; navigation and positioning sensors; maritime power, propulsion and payload…
• LMT (LOCKHEED MARTIN CORPORATION)
• FY2025 10-K: …at very long range and produced for the U.S. Air Force, U.S. Navy, and international customers. Hellfire and JAGM are air-to-ground missile used on rotary and fixed-wing aircraft, which is produced for the U.S. Army, Navy, Marine Corps and international customers. • The Javelin program, which is a one-person portable…
• FY2025 10-K: …• Training, logistics and simulation (TLS) programs such as those providing sustainment services and programs that provide simulators and associated training to U.S. military and foreign government customers. Effective January 2026, the IWSS and C6ISR lines of business within RMS were restructured and renamed…
• HII (HUNTINGTON INGALLS INDUSTRIES, INC.)
• FY2025 10-K: …U.S. defense spending priorities that reduce the demand for the types of ships we build and services we provide increase our exposure to market competition risk. If we are unable to compete successfully, we may generate lower revenues and lose market share, which would negatively impact our financial condition,…
• FY2025 10-K: …backlog within Mission Technologies, as well as nuclear-powered aircraft carrier and submarine program intangible assets within Newport News, with an aggregate weighted-average useful life of 28 years based on the long life cycle of the related programs. Amortization expense for the years ended December 31, 2025,…
• BWXT (BWX Technologies Inc)
• FY2025 10-K: …from operations or by raising additional capital through debt, equity or some combination thereof. Government Operations Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear fuel for the U.S. Department of Energy ("DOE")/National Nuclear Security…
• FY2025 10-K: …with manufacturing integration. This segment's capabilities include: • steam generation and separation equipment design and development; • thermal-hydraulic design of reactor plant components; • in-plant inspection, maintenance and modification services; • nuclear component modification and replacement; • commercial…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.