GE Aerospace (GE 0.71%) reported a stronger-than-expected quarter thanks to continued strong demand for airplane and engine spare parts. Investors are taking notice, sending shares of GE Aerospace up 8% as of noon ET.
Strong pricing leads to an earnings beat
GE Aerospace is the last vestige of onetime conglomerate General Electric. The company is a leading manufacturer of aircraft engines and other equipment.
The company earned $1.20 per share in the second quarter, topping Wall Street's $0.98-per-share consensus, despite revenue that at $8.22 billion was about $200 million below expectations. Total orders were up 18% to $11.2 billion, and GE generated $1 billion in cash from operating activities.
"The GE Aerospace team delivered another strong quarter marked by double-digit increases across orders, operating profit, and free cash flow," CEO H. Lawrence Culp Jr. said in a statement. "Given our performance year to date and momentum across our businesses, we are raising our full-year profit and free-cash-flow guidance."
GE now sees full-year earnings coming in at $3.95 to $4.20 per share, up from $3.80 to $4.05 per share. The consensus estimate was for earnings of $4.08 per share.
Is GE Aerospace a buy?
The earnings beat came despite supply chain constraints that depressed revenues. The takeaway for investors is that on the commercial side, GE can move all product it is able to bring to market.
That's unlikely to change anytime soon, setting the company up well for the quarters to come. The airlines are beginning to see some pullback after years of growing demand, but the industry remains relatively healthy, and with issues at Boeing and elsewhere limiting supplies of new planes hitting the market, there should be continued strong aftermarket, or spare-part, business up ahead.
For investors interested in buying into the strong trends of aerospace, GE is an attractive option.
