GE Aerospace Common Stock (GE) fair value

ACCE thesis

GE Aerospace makes commercial and military jet engines and the parts and services that keep them flying, with its largest franchise in the LEAP engine on narrowbody Airbus and Boeing aircraft. The moat is the installed base: once an engine is on a wing, the aftermarket spares and overhaul work tend to follow for decades, which is why the company can earn a 20.6% operating margin and a 48.2% return on equity. Revenue growth of 21.1% is the number that stands out, and the near-term driver is the ramp in commercial aftermarket demand as airline traffic keeps recovering and older fleets need more maintenance. At a 30.8x forward P/E the stock is not cheap, so the case rests on whether that growth in revenue turns into sustained earnings growth; the company's score of 59/100 and the absence of index membership in our data suggest the debate is still open, which makes this worth a closer look at the engine-level aftermarket numbers.