01. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 86
GE Aerospace (NYSE:GE) is a prominent defense stock due to its role in the aerospace sector, specifically through the development and production of military aircraft engines. The company’s Aviation segment, a core component of its operations, provides critical propulsion technology to defense contractors and militaries globally, making GE Aerospace (NYSE:GE) a key player in the defense industry. Furthermore, GE Aerospace (NYSE:GE) Aerospace division, which has recently become an independent company, delivers innovative propulsion systems for both commercial and military aircraft, further solidifying its position in the defense market.
GE Aerospace (NYSE:GE) Q2 2024 earnings report exceeded expectations, with the company posting an adjusted earnings per share (EPS) of $1.20, surpassing analyst estimates of $0.986. This strong performance was driven by significant growth in both revenue and profitability, particularly in GE Aerospace’s defense-related segments. The company achieved double-digit growth in operating profit and free cash flow, with its Aviation segment experiencing robust demand in both commercial and defense engines. Defense-related services and propulsion technology saw a 70% year-over-year profit increase, supported by improved pricing and a favorable product mix.
GE Aerospace (NYSE:GE) recurring revenue model is bolstered by its aftermarket services, which account for 70% of the company’s aerospace revenue. This resilient revenue stream supports the company’s long-term financial health, particularly in the defense sector. GE Aerospace (NYSE:GE) strong positioning in the military market is exemplified by its extensive installed base of 70,000 engines, including those used in combat aircraft. In Q2, GE’s defense-related orders grew, underpinned by increased demand for its advanced propulsion technologies. The T901 engine, part of the U.S. Army’s Improved Turbine Engine Program, remains a critical project for GE Aerospace (NYSE:GE), ensuring a competitive edge in defense propulsion.
Financially, GE Aerospace (NYSE:GE) operating profit surged by 37% year-over-year, with margins expanding by 560 basis points. Free cash flow reached $1.1 billion, up nearly 20%, further showcasing the company’s operational efficiency despite supply chain challenges. This solid financial performance, combined with its critical role in defense propulsion, makes GE a compelling stock for investors seeking exposure to the defense sector.
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