The company posted 31.5% year-over-year revenue growth, beat analyst EPS estimates, raised its full-year earnings guidance, and continued to improve profitability and cash flow.
GE Stock Dips Despite Strong Revenue
GE stock fell in pre-market trading on Thursday despite GE Aerospace delivering another quarter of better-than-expected financial results. Shares were down around 4.2% to $345.10 in pre-market trading after closing 1.87% higher at $360.35 in the previous session. This could suggest that investors were taking profits after the stock's recent rally.
GE stock price (Source: Google Finance)
GE Aerospace reported second-quarter revenue of $13.35 billion, up 31.5% from a year earlier and well ahead of Wall Street expectations of $11.91 billion. The company also posted adjusted earnings of $2.02 per share, comfortably beating analysts' estimates of $1.86 by approximately 8.6%.
Press release from GE Aerospace
The strong quarter caused management to raise its full-year adjusted earnings guidance. GE Aerospace now expects adjusted earnings per share of approximately $7.75 at the midpoint of its forecast, which is a 6.9% increase from its previous outlook. The company also continued to generate strong cash flow, with its free cash flow margin improving to 22.7%, up from 20.7% during the same quarter last year.
Revenue grew at a compound annual rate of 18.5% over the past five years, and accelerated to more than 20% annually over the last two years. The latest quarter was yet another step higher, with revenue increasing more than 30% compared with the same period last year.
(Source: GE Aerospace)
GE Aerospace has also become more profitable during its transformation into a standalone aerospace company. The business delivered an average operating margin of 18.4% over the past five years, while operating margins expanded by roughly 1.8 percentage points during that period as higher sales translated into improved operating leverage.
Profit growth has also outpaced revenue growth. Earnings per share have increased at a compound annual growth rate of 32.2% over the last five years. This indicates that the company has consistently improved profitability while expanding its business.
Although analysts expect revenue growth to moderate to around 6% over the next 12 months as comparisons become more difficult, GE Aerospace is still outperforming expectations across several key financial metrics.
Despite these positives, the pre-market decline could suggest that investors are locking in gains after GE stock's strong run over the past few months.
