Al Root

Investors want GE Aerospace to deliver healthy earnings, and offer comfort, when it releases its results on Tuesday morning.

A good day for the stock could start with stable first-quarter results. Wall Street is looking for an operating profit of $1.9 billion and earnings per share of $1.27 from sales of just under $9.1 billion, according to FactSet.

But assessing the numbers won't be as simple as comparing them with the year-earlier figures. Investors should remember that GE Aerospace and GE Vernova were still together at the end of March 2024; their separation was completed on April 2. A year ago, GE's aerospace segment reported an operating profit of $1.5 billion from first-quarter sales of $8.1 billion in the first quarter.

Whatever management says about the outlook will matter, too. In January, GE expected to increase sales by more than 10% in 2025, in line with Wall Street estimates. The midpoint of its range of forecasts of operating profit was $8 billion, while the midpoint of management's range of calls for earnings per share was almost $5.30, a little better than Wall Street projected at the time.

Beyond the numbers, investors will want clarity on how tariffs and the trade war unleashed by the Trump administration will affect costs and demand.

U.S. tariffs on steel and aluminum could affect costs at GE Aerospace, and to what degree the company will be able to pass that expense along to its customers isn't fully known. At the same time, investors would like some assurance that jet demand will rise regardless of any weakening of the economy that results from the trade war.

Early evidence isn't promising. Chinese tariffs of 125% on U.S. imports have led some Chinese airlines to refuse delivery of Boeing 737 MAX jets, which are powered by GE engines.

Still, a few jet sales upended by tariffs shouldn't be significant for GE or the industry. Demand just hasn't been a major concern for aerospace investors lately. Constraints on production resulting from Covid-19 and Boeing's quality problems have left airline customers wanting more jets for years.

Boeing would like to be making close to 600 737 MAX jets a year but the number has been closer to 300 a year since 2021.

As of the close on Monday, GE Aerospace stock was up 2% since the Nov. 5 presidential election, while the S&P 500 and Dow Jones Industrial Average fell 11% and 10%, respectively. That left GE Aerospace shares trading for about 34 times estimated 2025 earnings, down from about 36 times a year ago.

Options markets imply the stock will move about 5%, up or down, following the earnings. Shares have moved about 7% following the prior four earnings reports, rising three times and falling once over that span.

Management hosts a conference call at 7:30 a.m. Eastern time to discuss the results.

Write to Al Root at allen.root@dowjones.com

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April 21, 2025 16:43 ET (20:43 GMT)

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