GENERAL ELECTRIC COMPANY (GE): what the price requires
At today's price, GENERAL ELECTRIC COMPANY (GE) is priced for today's economics sustained for ~12.7 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/GE
Headline
| Field | Value |
|---|---|
| Ticker | GE |
| Company | GENERAL ELECTRIC COMPANY |
| Current price | $353.57/sh |
| Composition | Commercial Engines & Services 76% / Defense & Propulsion Technologies 24% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Must persist for | 12.7y |
| Multiple paid | 40x operating income |
Solve inputs: computed at a 11.5% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.2 years.
Reconcile: at the x-ray's 9.3% required return this reads ~8.2 years; the models below use their own rates.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +1.59σ |
| cohort percentile (of 225 peers) | 83 |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 1% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.24x | 4 | expensive |
| Earnings | 4.03x | 3 | expensive |
| Relative | 1.43x | 4 | expensive |
| Growth | 0.78x | 2 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
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=13)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $368.40 | 0.96x | yes | FCF base $8.2B, growth 22% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | $251.16 | 1.41x | yes | P/E 25.55x (blended: sector 18x + trailing (TTM) 43x), scenarios: 20.7x / 25.6x / 30.4x (bear / base = sector held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $88.52 | 3.99x | yes | BV/sh $17.13, ROE (TTM) 47.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $240.12 | 1.47x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $584.90 | 0.60x | yes | Rev $48.3B, growth 22% (input: historical growth; tapered), Terminal P/S: 6.2x / 7.7x / 9.2x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $242.02 | 1.46x | yes | EPS $8.12, growth 30% (input: historical EPS growth), PEG=1.45 (Fair) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $142.68 | 2.48x | yes | BV $17.13 + 5yr PV of (ROE (TTM) 47.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $55.95 | 6.32x | yes | √(22.5 × EPS $8.12 × BVPS $17.13) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | $73.48 | 4.81x | yes | FCF $7455.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $262.01 | 1.35x | yes | EPS $8.12 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $114.59 | 3.09x | yes | Revenue $48.31B × sector P/S 2.5x |
| PEG Fair Value | Relative | $304.50 | 1.16x | yes | EPS $8.12 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $87.78 | 4.03x | yes | EPS $8.12 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $22.6b |
| Net debt / NOPAT (after-tax) | 2.99x |
| Net debt / operating income (pre-tax) | 2.65x |
| Share count CAGR (buyback) | -12.1% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- GE Aerospace's moat is a global installed base of engines generating decades of high-margin aftermarket service revenue (long-term service-agreement billings near $9.9 billion), a recurring-services flywheel, not a pure cyclical.
- Q1 2026 was exceptional (revenue up 25%, commercial segment up 34% at a 26.4% margin, LEAP deliveries up to 520 from 319, RPO backlog $211 billion), with roughly $20 billion of net cash and maintained 2026 profit guidance.
- At $358 the price embeds an implied operating margin near 59% over about 15 years versus 17.6% today; only growth-DCF reaches it while every static frame says expensive, so the bet is a near-flawless multi-decade extrapolation with little cushion if the supply chain, cycle, or a rival engine disappoints.
Bull Case
GE Aerospace's structural advantage is one of the widest moats in industrials: a global installed base of jet engines that throws off decades of high-margin aftermarket revenue. The company designs and builds commercial and defense engines, but the real economics live in the long-term service agreements that maintain those engines over their twenty-to-thirty-year operating lives. The 10-K describes long-term service-agreement revenue rising on billings of $9,890 million (FY2025 10-K, accession 0000040545-26-000008), the recurring, contracted cash flow that makes this far more than a cyclical manufacturer. Once an airline standardizes on a GE or CFM engine, it is locked into GE's parts and service for the life of the fleet, a switching cost measured in decades.
The numbers behind that moat are exceptional right now. Q1 2026 revenue rose 25% to $12.39 billion, with the Commercial Engines and Services segment up 34% to $8.9 billion at a 26.4% operating margin, driven by higher shop-visit volumes, strong spare-parts demand, and a surge in LEAP deliveries to 520 engines from 319 a year earlier. Trailing return on equity is extraordinary, and free cash flow is robust. The combination of a growing installed base (every LEAP delivered today is a multi-decade service annuity tomorrow) and rising shop-visit demand on the existing fleet is a compounding flywheel.
The order book quantifies the runway. Remaining performance obligations reached $211.3 billion, up more than $20 billion since the end of 2025, with Q1 orders surging 87% to $23 billion and the commercial segment driving 93% order growth. GE Aerospace maintained 2026 operating-profit guidance of $9.85 billion to $10.25 billion and holds a strong net-cash position, roughly $20 billion, unusual for an industrial of this scale. A near-duopoly position in narrowbody engines with CFM, a $211 billion backlog, and a recurring-services model is the kind of durable franchise the static valuation frames structurally cannot price, which is exactly why only the growth-based methods reach the current price.
Bear Case
The competitive and operational threats to GE Aerospace are real even for a near-duopolist, and they cluster on the supply chain and the engines themselves. The most pressing is the durability and ramp of the LEAP engine. The narrowbody franchise GE shares through CFM faces its direct rival, Pratt and Whitney's geared turbofan, which has had its own well-publicized durability problems but remains a determined competitor for every new fleet decision. More immediately, GE has had to balance new-engine production against aftermarket parts, and supply-chain bottlenecks across aerospace, castings, forgings, and specialized labor, have constrained how fast it can deliver. If LEAP shop-visit costs run high or time-on-wing disappoints, the lucrative service economics that justify the valuation come under pressure.
The demand side carries cyclical and geopolitical risk that the price largely ignores. Commercial aviation is tied to global air travel, and GE's own 2026 guidance assumes flat to low-single-digit departures growth, elevated fuel prices, and no global recession, a benign set of assumptions that a downturn would break. Management has also flagged that Middle East conflict could affect operations, and a sharp slowdown in air traffic would cut shop visits and spare-parts demand, the highest-margin revenue, fastest. A company priced for durable compounding is most exposed precisely when the cycle that feeds the aftermarket turns.
The valuation leaves almost no room for any of this. The inversion is stark: at $358 the implied operating margin is about 59% over a roughly 15-year duration, versus the 17.6% the company earns today, which is an extraordinary level of embedded optimism. Every static frame screams expensive, with earnings-power value near $3 (distorted by spin-related accounting but directionally damning), the relative method near $253, and the simple excess-return frame near $89. Only the growth-DCF reaches the price.
Valuation
Inverting the $357.67 price produces one of the most demanding reads in the universe: the implied operating margin is about 59% sustained over roughly 15 years, against a current operating margin near 17.6%. The engine characterizes the price as high, with asset, earnings-power, and peer-multiple models all saying richly valued and only the growth-DCF reaching it, a pronounced moat-and-durability premium.
The model X-ray is lopsided. The perpetual-growth DCF lands near $311 and the relative-valuation method near $253 on a blended P/E around 26x, with two-stage excess return near $240 and the Peter Lynch frame near $242. Against those, the static frames collapse: earnings-power value near $3 (heavily distorted by the spin-off-period accounting in the five-year average, so directionally rather than literally informative), the Graham number near $56, and the simple excess-return model near $89 off a $17.13 book value, though trailing ROE near 48% reflects the lean post-spin equity base. The blended landing across applicable methods is near $242, well below the $358 market.
The spread is the information. The static methods are structurally unable to price a recurring-services aerospace franchise whose value lives in decades of contracted aftermarket cash flow, so they land far below the price; the growth frames that capitalize the LEAP installed base and shop-visit ramp land closer. The peer set the model returned is industrials broadly rather than a clean engine-maker comparable, so peer multiples understate the franchise. The honest read is that GE Aerospace is an exceptional business at a price that already pays for a near-flawless multi-decade extrapolation of the current aftermarket boom. The roughly $20 billion net-cash position means the balance sheet is a strength, not a risk; the risk is entirely in the demanding assumptions the price embeds. The investable question is whether the installed-base flywheel and $211 billion backlog can deliver the kind of durable margin expansion the inversion requires, or whether the price has run ahead of even an excellent franchise's economics.
Catalysts
GE Aerospace reported Q1 2026 on April 21, beating on every line: revenue up 25% to $12.39 billion (more than $1.6 billion ahead of consensus), operating income up 15% to $2.50 billion, and the Commercial Engines and Services segment up 34% to $8.9 billion at a 26.4% margin. LEAP engine deliveries rose 63% to 520 units, orders surged 87% to $23 billion, and remaining performance obligations reached $211.3 billion. The company maintained 2026 operating-profit guidance of $9.85 billion to $10.25 billion, and the stock dipped about 4% despite the beat as the Middle East conflict overshadowed the print.
The near-term catalysts are the LEAP production ramp and shop-visit demand. The data points to watch are LEAP delivery cadence against supply-chain constraints, spare-parts and shop-visit volumes (the highest-margin revenue), and LEAP durability and time-on-wing, since the aftermarket economics that justify the valuation depend on them. GE's 2026 guidance assumes flat to low-single-digit departures growth, elevated fuel prices, and no global recession, so global air-traffic trends and fuel are the macro variables that decide whether the aftermarket boom continues. The Middle East conflict and broader geopolitical risk to aviation are the external swing factors management has explicitly flagged.
Sources: GE Aerospace Q1 2026 results (geaerospace.com, Leeham News, TIKR, Tickeron, 2026); FY2025 10-K (accession 0000040545-26-000008).
Peer Cohorts (Per Segment, With Filing Citations)
Commercial Engines & Services (reported)
- RTX (RTX CORPORATION)
- (no filing in the citation store)
- HON (Honeywell International Inc)
- (no filing in the citation store)
- TDG (TransDigm Group Incorporated)
- (no filing in the citation store)
- HEI (HEICO CORPORATION)
- (no filing in the citation store)
- MOG-A (MOOG Inc.)
- (no filing in the citation store)
- WWD (WOODWARD, INC.)
- (no filing in the citation store)
Defense & Propulsion Technologies (reported)
- RTX (RTX CORPORATION)
- (no filing in the citation store)
- LHX (L3HARRIS TECHNOLOGIES, INC.)
- (no filing in the citation store)
- GD (GENERAL DYNAMICS CORPORATION)
- (no filing in the citation store)
- NOC (NORTHROP GRUMMAN CORP /DE/)
- (no filing in the citation store)
- LMT (LOCKHEED MARTIN CORPORATION)
- (no filing in the citation store)
- HII (HUNTINGTON INGALLS INDUSTRIES, INC.)
- (no filing in the citation store)
- BWXT (BWX Technologies Inc)
- (no filing in the citation store)
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.
- 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.