Ge Aerospace's Stock Surges to a 16-year High After Beating Earnings Expectations

Shares of GE Aerospace experienced a significant surge on Tuesday following the announcement of quarterly earnings that surpassed expectations. This includes results prior to the completion of the spinoff of GE Vernova. Additionally, the company raised its full-year outlook.

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GE Aerospace, renowned for its production of jet engines for both commercial and military aircraft, reported a strong start to the year. CEO Larry Culp described the performance as robust, highlighting momentum within both GE Aerospace and GE Vernova during the post-earnings call with analysts.

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Culp emphasized the considerable demand cycle for services within the GE Aerospace business, attributing it to the increasing frequency of air travel. GE Aerospace's stock rose by 5.8% during midday trading, heading towards its highest close since May 2, 2008. Similarly, GE Vernova shares saw a 6.6% jump, approaching their highest close since the spinoff on April 2.

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On a combined basis, first-quarter net income decreased to $1.54 billion, or $1.39 per share, compared to $7.36 billion, or $6.71 per share, in the same period last year. Adjusted earnings per share, excluding one-time items, increased to 82 cents from 27 cents, surpassing the FactSet consensus of 65 cents. Revenue also saw a growth of 10.8% to $16.05 billion, exceeding the FactSet consensus of $15.25 billion.

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When assessed individually, GE Aerospace witnessed a revenue surge of 15% to $8.1 billion, with orders skyrocketing by 34% to $11 billion. Free cash flow increased to $1.7 billion from $800 million the previous year. Culp attributed this growth to the expansion and modernization efforts of both airlines and defense customers, leading to a backlog exceeding $150 billion and bolstering the company's engine and service installations.

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Looking ahead, GE Aerospace raised its 2024 guidance range for operating profit to $6.2 billion to $6.6 billion from the previous range of $6.0 billion to $6.5 billion. Adjusted EPS is projected to be between $3.80 and $4.05, compared to the current FactSet consensus of $4.25. The company maintained its outlook for revenue, expecting a growth rate exceeding low-double digits, and free cash flow of over $5 billion.

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Year to date, GE's stock has surged by 56.1%, outperforming the Industrial Select Sector SPDR ETF, which has seen a 7.8% increase, and the S&P 500, which has grown by 6.1%.

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