GE Aerospace GE has reported third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
It is worth noting that in April 2024, GE Aerospace emerged as a separate public company, following the spin-off of GE Vernova Inc. GEV from General Electric.
Inside the Headlines
The company’s third-quarter adjusted earnings were $1.15 per share, which beat the Zacks Consensus Estimate of $1.13. The bottom line rose 25% year over year.
Total revenues were $9.84 billion, indicating a year-over-year increase of 6%. Total orders grew 28% on a year-over-year basis to $12.6 billion.
Adjusted revenues were $8.94 billion, marking a year-over-year rise of 6%. However, the metric missed the consensus estimate of $8.97 billion.
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GE Aerospace Price, Consensus and EPS Surprise
GE Aerospace price-consensus-eps-surprise-chart | GE Aerospace Quote
Segmental Discussion
Revenues from the company’s Commercial Engines & Services business jumped 8.4% year over year to $7 billion. The results were driven by robust orders for both services and equipment with strong spare parts demand. Total orders in the segment rose 29% year over year to $9.8 billion.
The Defense & Propulsion Technologies segment’s revenues totaled $2.2 billion, up 1.7% year over year. Results benefited from the strong momentum in the defense & propulsion technologies business. Total orders in the segment increased 19% year over year to $3 billion.
Margin Profile
GE Aerospace’s cost of sales (comprising costs of equipment and services sold) grew 4% year over year at $6.23 billion. Selling, general and administrative expenses increased 32.9% year over year to $1.33 billion. Research and development expenses totaled $331 million, reflecting a year-over-year rise of 34%.
GE Aerospace’s adjusted operating profit was $1.82 billion, up 14% year over year. The margin was 20.3%, up 150 basis points.
Balance Sheet & Cash Flow
Exiting the third quarter, GE Aerospace had cash, cash equivalents and restricted cash of $13.7 billion compared with $15.2 billion at the end of December 2023. The company’s long-term borrowings were $18.2 billion compared with $19.4 billion at the end of December 2023.
For the first nine months of 2024, the adjusted free cash flow was $4.57 billion compared with $3.49 billion in the year-ago period.
In the first nine months of the year, GE rewarded its shareholders with a dividend payment of $702 million, up 40.1% year over year. The company repurchased 19.6 million shares for $3.3 billion during the same period.
Outlook
For 2024, GE expects adjusted revenues to grow in the high-single-digit range from the year-ago period's actual. Operating profit is estimated to be $6.7-$6.9 billion compared with the $6.5-$6.8 billion guided earlier. Adjusted earnings are predicted to be $4.20-$4.35 per share, higher than the $3.95-$4.20 previously mentioned. The free cash flow is anticipated to be $5.6-$5.8 billion, with the conversion rate projected to be more than 100%.
GE Aerospace expects the Commercial Engines & Services segment’s revenues to grow in the low-double digits to mid-teens, whereas operating profit is anticipated to be $6.6-$6.8 billion. For the Defense & Propulsion Technologies segment, revenues are projected to increase in the mid-single to high-single-digit range, whereas operating profit is anticipated to be $1.0-$1.3 billion.
Zacks Rank & Stocks to Consider
GE Aerospace presently carries a Zacks Rank #3 (Hold). A couple of better-ranked companies are discussed below:
Markel Group Inc. MKL currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MKL delivered a trailing four-quarter average earnings surprise of 35.4%. In the past 60 days, the Zacks Consensus Estimate for Markel’s 2024 earnings has increased 1.8%.
Parker-Hannifin Corporation PH currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 (ending June 2025) earnings has increased 0.3%.
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