Key Takeaways:
- The “Moat” is Massive: GE Aerospace controls the sky with an installed base of 78,000 engines, the largest in the industry, and a massive $175 billion backlog that secures revenue for years to come.
- “FLIGHT DECK” Efficiency: Management is deploying a new proprietary lean operating model called FLIGHT DECK to drive improvements across suppliers and double digital shop visit growth.
- Price Projection: The valuation model points to a target of $498 by the end of 2029, driven by the lucrative “aftermarket services” super-cycle.
- Solid Returns: This target implies a 12% annualized return from the current price of $318, signaling that the post-spin-off rally still has room to run.
General Electric (GE) has successfully completed its transformation into GE Aerospace, and the market loves it.
No longer a sprawling conglomerate, the company is now a pure-play bet on the global aviation super-cycle.
The investment thesis rests on two pillars: Install Base and Aftermarket Services.
GE powers 3 out of every 4 commercial flights, and with 78,000 engines in service, they have a captive audience for decades of high-margin maintenance revenue.
Executive Rahul Ghai highlighted that services now make up the majority of the backlog, providing a predictable stream of cash flow that is less cyclical than selling new engines.
Financially, the company is executing well.
LTM Operating Income has surged to $10.05 billion, with margins expanding to a robust 22.9% as supply chain constraints slowly ease.
With the stock trading at $318, is it too late to board, or is this just the beginning of a long-term compounder?
What the Model Says for GE Stock
This analysis evaluates GE’s potential through 2029, factoring in the long-tail profitability of the LEAP engine program.
The model signals a “Buy.”
Using a forecast of 13.4% Revenue Growth (CAGR) and 16.4% Net Income Margins, the model points to a target price of $498 by December 2029.
This implies a 12.0% annualized return from today’s levels.
While not explosive, this is a double-digit compounder return from a high-quality industrial leader, which is attractive in the current market environment.
Wall Street analysts are focused on the shorter term.
The average street target for January 2026 is roughly $355, implying about 11% upside over the next 12 months, which aligns closely with the model’s annualized pace.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for GE stock:
1. Revenue Growth: 13.4%
The growth engine is services.
Management expects the services business to grow “double-digits over the medium term” as older engines come in for shop visits.
Specifically, shop visits for the massive GE90 and GEnx widebody engines are entering their prime, and these visits are “50% more intensive” (read: more expensive) than the first visit, driving higher revenue per event.
The model forecasts a strong 13.4% CAGR, supported by this structural tailwind.
2. Operating Margins: 16.4% (Net)
Profitability is set to ramp up as the LEAP engine matures.
Currently, selling new LEAP engines is a lower-margin activity.
However, management projects that by 2030, “LEAP profit dollars will be similar to what CFM56 is generating,” marking a massive profitability inflection point as the fleet ages into its service window.
Additionally, the FLIGHT DECK lean model is helping offset inflation and improve material flow.
The model assumes Net Income Margins will expand to 16.4% by 2029.
3. Exit P/E Multiple: 39.3x
GE currently trades at a premium multiple of roughly 47x, reflecting its status as a “must-own” aerospace monopoly.
The model assumes a slight compression to an exit multiple of 39.3x.
This remains high compared to industrial peers, but is justified by the visibility of its 20-year service contracts.
What Happens If Things Go Better or Worse?
The downside appears limited due to the backlog, while upside relies on flawless execution of the LEAP program (these are estimates, not guaranteed returns).
- Low Case: If supply chains break or shop visits are delayed, the model points to a price of $355, offering a safe but slow 2.8% annual return.
- Mid Case: If the services super-cycle plays out as expected, the model points to a 56% total return by 2029.
- High Case: If margins expand faster than anticipated due to FLIGHT DECK efficiencies, the stock could hit $546, delivering a strong 14.7% annual return.
See what analysts forecast for the next 5 years for GE stock (Free with TIKR) >>>
How Much Upside Does GE Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
