GE Aerospace shares slide after strong Q2, raised outlook

GE Aerospace shares fell more than 4% in premarket trading to $344.70 after the company reported second-quarter revenue rose 24% year over year to $12.6 billion and operating profit reached $2.7 billion. The company raised its full-year profit and earnings guidance.

Orders rose 17% in the quarter and nearly 50% in the first half, lifting the backlog above $210 billion. Sales in the commercial engines and services segment increased 27% to $9.7 billion, and defense and propulsion revenue reached $3.4 billion. Major orders in the quarter included deals with Copa Airlines and Turkish Aerospace.

Chief Executive Larry Culp described the quarter as strong, commenting, ‘GE Aerospace delivered a strong second quarter with revenue and EPS both up more than 20% driven by robust commercial services growth. FLIGHT DECK continues to fuel significant operational improvements across services and equipment with record internal shop visit output.’

For the full year, GE Aerospace now expects operating profit between $10.5 billion and $10.75 billion and earnings per share of $7.65 to $7.85, compared with last year’s operating profit of $9.1 billion and EPS of $6.37. Company officials cited strength in services and equipment as a driver of the higher outlook.

The stock traded about 10% below its high for the year after peaking near $382 following an April low of $269.47. Technical indicators show the share price remains above its 50-day and 100-day moving averages, with resistance identified near $375. Traders priced the report into premarket activity, contributing to the early session decline.

GE Aerospace’s forward price-to-earnings ratio stood near 47.65, above the industrial sector median of about 21. By comparison, Nvidia and Micron have forward P/E ratios near 23 and 15 respectively. Analysts referenced the premium valuation relative to peers while noting the company’s market share and backlog.

The results arrived amid civil aviation disruptions tied to the US-Iran conflict, and the company’s commercial services business reported growth through the period.

Market participants will watch order intake, the conversion of backlog into revenue and how the raised guidance translates into full-year results.