What’s Next For GE Stock After A Solid Q1?
GE Aerospace (NYSE: GE) recent first-quarter performance significantly exceeded expectations, with both revenue and adjusted earnings surpassing street estimates. The company reported revenue of $9.94 billion and adjusted earnings per share of $1.49, notably higher than the consensus forecasts of $9.04 billion and $1.26, respectively. This strong Q1 performance builds on the momentum from the previous quarter, where better price realization and increased service contributions were key drivers. Furthermore, investor optimism surrounding GE stock, now focused on aviation technology following the spin-offs of its healthcare and energy businesses, is evident in its year-to-date performance. The stock has gained 6% since the beginning of the year, outperforming the broader S&P 500 index, which is down 12%. But, if you are looking for an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
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How Did GE Fare In Q1?
GE demonstrated strong financial performance in Q1 2025, with revenue increasing by 11% year-over-year to $9.94 billion. Our GE Aerospace’s revenue dashboard has more details on the company’s sales. This sales growth, coupled with a significant 460 basis point year-over-year improvement in adjusted operating margin to 23.8%, drove a substantial 60% year-over-year increase in the bottom line, reaching $1.49 per share.
Examining segment performance, commercial engines and services led the way with a robust 14% year-over-year growth to $6.98 billion, while defense and propulsion technologies saw a more modest 1% increase to $2.32 billion. Looking ahead, GE’s positive momentum is expected to continue, supported by its strong aftermarket business. This confidence is reflected in the company’s reiterated outlook for 2025, projecting low double-digit revenue growth compared to $35.1 billion in 2024, and adjusted earnings per share in the range of $5.10 to $5.45, up from $4.60 last year. Further evidence of this positive trajectory is the 12% year-over-year surge in total orders to $12.3 billion during the quarter.
What Does This Mean For GE Stock?
GE stock is trending higher after its Q1 results announcement. Looking at a slightly longer period, the increase in GE stock over the last four-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 10% in 2021, -11% in 2022, 94% in 2023, and 65% in 2024.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could GE face a similar situation as it did in 2021 and underperform the S&P over the next 12 months — or will it see a strong jump? While we will soon update our model for GE to reflect the latest results, after its recent rise, GE stock looks like it may have some room for growth.
At its current levels of around $185, GE stock trades at 36x trailing earnings, marginally higher than the stock’s average P/E ratio of around 35x over the last two years. However, with the double-digit growth in sales and far more profound earnings growth, driven by margin expansion, we think a slight rise in valuation multiple for GE makes sense.
While GE stock looks like it has some room for growth, it is helpful to see how GE Aerospace’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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