GE Aerospace Shares Drop 15% Despite Strong Engine Demand

GE Aerospace shares have declined 15% over the past three months, underperforming the S&P 500 composite, which rose 3.2% during the same period. The stock closed at $305.62, sitting below its 52-week high of $388.84 and its 50-day and 200-day moving averages. Peer companies in the sector also saw declines, with RTX Corporation shares down 6% and L3Harris Technologies shares down 18.6%.

The company’s performance is driven by persistent strength in its Commercial Engines & Services segment. In the second quarter of 2026, engine deliveries within this segment increased 26% year over year. Revenues for the segment jumped 27% year over year, while orders rose 18%. Demand for LEAP, GEnx, and GE9X engines remains solid, supported by air traffic growth and fleet renewal activities.

Recent major awards include GEnx engine orders from United Airlines and Delta Air Lines for their Boeing 787 Dreamliners. American Airlines and Copa Airlines secured LEAP engine orders for their narrowbody fleets. Additionally, CFM International, the joint venture between GE and Safran, won an order from BOC Aviation for up to 200 LEAP-1A and 100 LEAP-1B engines.

The Defense & Propulsion Technologies segment also contributed to results, with second-quarter revenues up 16% and orders up 12% year over year. Revenues from the Defense & Systems business increased 12%, aided by unit deliveries rising 7%. The Propulsion & Additive Technologies business saw revenues grow 23%, led by Avio Aero.

GE Aerospace has raised its free cash flow forecast for 2026 to $8.9-$9.2 billion, up from a prior projection of $8.0-$8.4 billion. In the first six months of 2026, the company paid $873 million in dividends and repurchased $4.2 billion worth of shares. The dividend was raised by 30.6% to 36 cents per share in February 2026.

Concerns remain regarding rising debt levels and operating costs. Total borrowings reached $19.2 billion at the end of the second quarter of 2026, comprising $2 billion in short-term debt and $17.2 billion in long-term debt. Cost of sales surged 26.7% year over year to $8.7 billion in the second quarter.

The stock trades at a forward price-to-earnings ratio of 34.79 times, which is higher than the industry average of 27.16 times. RTX Corporation and L3Harris Technologies trade at lower multiples of 24.13 times and 18.03 times, respectively. The Zacks Consensus Estimate for GE’s 2026 earnings increased by 0.6% over the past 60 days to $7.91 per share, reflecting year-over-year growth of 24.2%. The consensus for 2027 earnings also rose by 0.6% to $9.04 per share, indicating a year-over-year increase of 14.3%. GE Aerospace currently holds a Zacks Rank #2 (Buy).