Key Takeaways
- GE Aerospace shares fell 2% today despite beating third-quarter estimates with adjusted EPS of $2.25 versus a $2.01 consensus and raising its 2026 guidance.
- The market is looking past the beat at commercial services, which grew more slowly this quarter and is guided to low-double-digit growth in 2027.
- Free cash flow fell 14% to $2.0 billion in the quarter, though it’s up 13% for the first nine months of 2026.
- The next test is fourth-quarter results early next year, and whether that 2027 services outlook moves.
GE Aerospace (GE) beat third-quarter estimates and raised its 2026 guidance before the open today. The stock is still down 2%.
That’s four straight quarters of beats followed by a falling stock.
What exactly happened
Adjusted EPS rose 36% to $2.25, ahead of the $2.01 consensus. Adjusted revenue grew 18% to $13.3 billion, against $12.88 billion expected. Orders jumped 49% to $19.0 billion.
Then came the raise:
- Adjusted EPS: $8.00 to $8.10, up from $7.65 to $7.85
- Operating profit: $10.9 billion to $11.0 billion, up from $10.55 billion to $10.75 billion
- Free cash flow: $9.1 billion to $9.4 billion, up from $8.9 billion to $9.2 billion
“We are raising our 2026 guidance across the board,” Chairman and CEO H. Lawrence Culp, Jr. said in the release. GE now expects commercial services to grow at a low-double-digit rate in 2027.
That EPS range is above the $7.93 analysts expected for 2026 going into the report…
…so the 2026 estimate should move up from here.
Services set the bar
So why the drop? Commercial services is GE’s profit engine, and it cooled this quarter: services revenue in the commercial engines business grew 17%, with internal shop visit revenue up 12%. Year to date, commercial services revenue is still up more than 20%, but the low-double-digit growth GE guided to for 2027 is a big step down from the low 20s it expects this year.
The other soft spots are smaller. The segment’s margin slipped 10 basis points to 27.9% on mix and inflation, and free cash flow fell 14% to $2.0 billion, though it’s up 13% through nine months. The insurance business GE is running off also swung from a profit to a $210 million pretax loss, which the adjusted figures leave out.
A full price for a great business
At Monday’s close, GE traded at 36.8x forward earnings, a bit above its five-year average of 35.9x…
Today’s drop takes it closer to 35x. That’s still a price that assumes the aftermarket keeps surprising.
I don’t think anything in this report breaks the GE story. Orders are up 49%, and the backlog is over $170 billion, so demand looks fine. The problem is the multiple: at this price, the stock needs services growth to hold up, and a 17% quarter heading into a low-double-digit year points the other way.
Of course, a company that just raised guidance across the board could raise that 2027 number too. Fourth-quarter results early next year are the next test.
So what is GE Aerospace stock actually worth?
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