Data News > GE Aerospace: A New Era for General Electric

GE Aerospace: A New Era for General Electric

By KlickAnalytics Data Insights  |   April 3, 2024 08:02PM ET

Key Points

- GE completes restructuring program with spin-off of power division Vernova
- GE Aerospace focuses on the attractive Aerospace market with largest installed base and profitable aftermarket sales
- GE Aerospace debuts as an independent public company, with stock soaring and Wall Street support
- Ramp up of engine production to result in decades of aftermarket revenue
- Valuation multiple expansion and premium for aerospace companies contributing to GE Aerospace's success

General Electric (GE) has completed a significant restructuring program with the spin-off of its power division Vernova, resulting in a streamlined entity fully focused on the attractive Aerospace market. This move marks a new era for the company, with a strong emphasis on the aviation industry. The company's current-gen engines, including the best-selling CFM56, provide a highly profitable aftermarket sales stream that is expected to last well into the 2030s.

Following the spin-off of the GE Vernova business, GE Aerospace has commenced its business operations as an independent public company. This transition has been met with enthusiasm from Wall Street, with early new targets implying more gains ahead for the stock. The company's strong earnings visibility from the rollout of next-gen engines and margin expansion as LEAP and GEnx mature, indicate a credible runway for GE to deliver MDD EPS growth through 28E.

The stock of GE Aerospace has been soaring, with the ramping up of engine production expected to result in decades of aftermarket revenue. Additionally, the company has the potential to grab market share from RTX (Pratt & Whitney) on the Airbus A320 neo family of airplanes. This promising outlook has contributed to the stock's surge in value, with investors showing confidence in the company's future prospects.

Aerospace companies tend to command valuation premiums, and GE Aerospace is no exception. The company is enjoying valuation multiple expansion, further contributing to its success in the market. Furthermore, airplane engines benefit from lucrative aftermarket revenue as they are utilized over a multi-decade lifespan, adding to the attractiveness of GE Aerospace as an investment opportunity.

The success of GE Aerospace, formerly General Electric, has been evident in the market, with its stock trading like a hot IPO. Vernova shares have surged more than 20% over the past week, reflecting the positive sentiment surrounding the company's future. With a focus on the aviation industry, a strong emphasis on aftermarket revenue, and the support of Wall Street, GE Aerospace is well-positioned for continued success in the market.

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