Quick Read
- GE Aerospace stock fell over 6% despite beating Q4 earnings and revenue estimates.
- The company reported a Q4 net profit of $2.85 billion and adjusted EPS of $1.57, exceeding analyst expectations.
- Total orders surged 74% to $27 billion in Q4, with the backlog climbing to $190 billion.
- The 2026 forecast projects a moderation in growth rates for both commercial and defense segments.
- CEO Larry Culp remains confident in “substantial EPS and cash growth” for the upcoming year.
GE Aerospace stock experienced a notable decline of more than 6% on Thursday, a surprising market reaction that unfolded despite the company reporting robust fourth-quarter earnings and providing a full-year guidance that surpassed Wall Street’s expectations. This downturn, as reported by The Economic Times and Seeking Alpha, primarily reflected investor anxiety regarding the potential moderation of the company’s previously rapid growth trajectory in the upcoming fiscal year.
Strong Performance in Q4 2025 Exceeds Expectations
In the fourth quarter of 2025, GE Aerospace demonstrated exceptional financial health, outperforming analyst consensus across several key metrics. The company posted a net profit of $2.85 billion, translating to $2.40 per share, marking a significant increase from $2.29 billion, or $1.75 per share, recorded in the same period a year earlier. Adjusted earnings per share (EPS) reached $1.57, comfortably beating consensus estimates by $0.14.
Revenue figures were equally impressive. Adjusted revenue surged by 20% year-over-year, reaching $11.87 billion. The commercial division, a critical component of GE Aerospace’s operations, saw its engines and services revenue climb by a substantial 24% to $9.46 billion, surpassing analyst expectations of $8.95 billion. Similarly, the defense and propulsion technology segment reported a 13% increase in revenue, hitting $2.84 billion, also exceeding consensus estimates of $2.63 billion.
Demand across both segments remained exceptionally strong, underscored by a remarkable surge in orders during the quarter. Total orders jumped an impressive 74% to $27 billion, pushing the company’s backlog to approximately $190 billion. Commercial division orders alone increased by 76%, while defense orders rose by 61%, highlighting robust demand for GE Aerospace’s products and services globally.
2026 Outlook Signals Moderating Growth Rate
Despite the strong Q4 results, the primary catalyst for Thursday’s stock dip appeared to be the company’s fiscal 2026 outlook, which, while still positive, indicated a deceleration in its growth rate. GE Aerospace forecasts adjusted revenue growth in the low double digits for fiscal 2026. This follows a robust 20.5% growth in 2025, when revenue reached $42.3 billion. While the company expects full-year adjusted earnings of $7.10 to $7.40 per share, largely above analysts’ consensus estimate of $7.14 per share, and projected adjusted free cash flow of $8 billion to $8.4 billion for 2026, the market focused on the pace of expansion.
Specifically, the forecast for commercial engines and services revenue anticipates a mid-teens percentage rate increase in 2026, a decrease from the nearly 24% growth observed in 2025. Similarly, defense and propulsion technology revenue is expected to grow at a mid- to high-single-digit pace, compared with the 11.4% growth experienced last year. This projected moderation, even from a high base, seemed to fuel investor concerns about the sustainability of GE Aerospace’s rapid expansion.
Analyst Perspectives and CEO Confidence
Following the earnings report and the subsequent market reaction, analysts offered mixed but generally supportive views. JP Morgan analyst Seth Seifman, as noted in the Seeking Alpha report, maintained an “Overweight” rating on GE stock. However, Seifman also highlighted potential headwinds that could make it more challenging for GE Aerospace to expand margins in 2026 compared to 2025. These factors include issues tied to the 9X engine, faster equipment growth relative to services, and the potential for further normalization in spare engine demand.
Despite the market’s immediate response, GE Aerospace CEO Larry Culp expressed confidence in the company’s future trajectory. According to Seeking Alpha, Culp stated that the company is well-positioned for “another year of substantial EPS and cash growth.” This optimistic outlook is underpinned by an anticipated strong demand for spare parts and services, driven by the continued resurgence in global air travel. Culp’s remarks suggest that the company views the projected moderation as a natural evolution following exceptional growth, rather than a fundamental weakening of its market position or operational capabilities.
Understanding Market Dynamics Amidst Strong Fundamentals
The market’s reaction to GE Aerospace’s earnings underscores a critical dynamic in investor psychology: expectations often outweigh current performance. While the fourth quarter results were undeniably strong and exceeded analyst estimates, the forward-looking guidance, signaling a deceleration in the *rate* of growth, triggered a sell-off. This highlights that for companies experiencing rapid expansion, even a forecast of continued, albeit slower, growth can be perceived negatively if it doesn’t meet the market’s often aggressive hunger for exponential gains. The paradox of a stock falling despite beating earnings is a common occurrence when investors are more concerned with future momentum than past achievements, especially in sectors highly sensitive to economic cycles and global demand like aerospace.
The confluence of strong current performance and a slightly tempered future growth outlook created a scenario where investors prioritized the latter, suggesting a cautious approach to valuations amid potential shifts in macroeconomic conditions or competitive landscapes, even as the company’s underlying fundamentals remain robust and its backlog substantial.