GE Aerospace Raises Full-Year Profit Outlook After Strong Q3 Beat but Stock Falls on Cash Flow Miss

GE Aerospace delivered a broad third-quarter beat on Tuesday, reporting adjusted EPS of $2.25 against the $2.01 consensus estimate, a gain of 36% year over year, while adjusted revenue of $13.29 billion topped the $12.86 billion estimate. GAAP revenue came in at $14.12 billion, up 16% from a year earlier, and operating profit rose 30% to $2.99 billion, expanding operating margin by 220 basis points to 22.5%. Total orders surged 49% to $19.0 billion, underpinned by demand for engine repairs and spare parts.

Commercial Engines and Services revenue climbed 21% to $10.34 billion, while Defense and Propulsion Technologies revenue rose 7% to $3.47 billion. The company secured commitments for more than 1,800 engines during the quarter and announced an agreement to acquire CPP, a move intended to expand capacity for mission-critical castings. GE Aerospace also completed what it described as the world's first hybrid-electric flight above 30,000 feet.

On the strength of the results, GE raised its full-year 2026 adjusted EPS guidance to $8.00-$8.10, up sharply from the prior range of $7.65-$7.85 and above the $7.92 analyst consensus. Full-year operating profit guidance was lifted to $10.9-$11.0 billion from $10.55-$10.75 billion, adjusted revenue growth was raised to approximately 19%-20% from a prior high-teens target, and free cash flow guidance moved to $9.1-$9.4 billion from $8.9-$9.2 billion. Management said it now expects 2027 commercial services to grow at a low-double-digit rate, supported by a commercial services backlog exceeding $170 billion.

Despite the beat-and-raise quarter, GE Aerospace shares fell roughly 4% to around $299 in trading Tuesday. Analysts pointed to two concerns: third-quarter adjusted free cash flow of $2.04 billion came in below the $2.22 billion estimate and was down 14% year over year, and a shift in product mix toward lower-margin equipment sales raised questions about near-term profitability. The CEO also acknowledged that more work remains on Boeing 787 engine deliveries. Jefferies reiterated its rating following the results and Vertical Research maintained a buy rating with a $400 price target.