GE Aerospace Jumps 4% As Soaring Margins, Robust Orders Offset Tariff Concerns

Shares of GE Aerospace GE surged over 4% Tuesday after the company delivered a first-quarter earnings beat.

The beat highlighted expanding margins and resilient demand across its commercial and defense segments despite economic headwinds.

In a note shared Tuesday, Goldman Sachs analyst Noah Poponak said GE’s first-quarter results were ahead of consensus on margins, earnings, and free cash flow. He added that the company managed to reaffirm its 2025 outlook even while factoring in elevated costs from tariffs and slowing air traffic.

Setting aside the 10.6% surge on April 9 driven by investor enthusiasm over a 90-day pause in tariffs, GE Aerospace is on pace for its most substantial single-day gain since Jan. 23, when shares jumped 6.6% after fourth-quarter 2024 earnings.

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A Solid Beat Across The Board

GE Aerospace reported adjusted earnings per share of $1.49 in first quarter, beating analysts' expectations of $1.27.

Revenue for the quarter came in at $9 billion, up 11% year-over-year and roughly in line with forecasts.

Operating profit hit $2.1 billion on a margin of 23.8%, coming in 12% above consensus. Segment EBIT was 6% above Wall Street estimates.

Free cash flow, a key metric for industrial firms, reached $1.4 billion, comfortably topping consensus of $1.22 billion and well ahead of Goldman Sachs’ internal forecast of $900 million.

Commercial Engines Power Higher

The Commercial Engines & Services (CES) unit generated $6.98 billion in revenue, slightly above the expected $6.96 billion, marking a 14% increase from the prior year. This growth was driven by strength in spare parts, improved pricing, and internal shop visit revenues, despite a lower number of equipment units sold.

EBIT margins at CES were 27.5%, compared to Goldman's forecast of 27.8%. Total company orders rose 12% year-over-year, with CES orders climbing 15%.

Meanwhile, Defense & Propulsion Technologies (DPT) revenue was $2.32 billion, up 1% year-over-year, falling short of estimates. Still, EBIT margin at DPT came in at 12.7%, handily beating the 9.5% projection.

Tariffs Loom, Yet GE Holds Firm

What makes GE's performance more striking is that its full-year guidance doesn't assume any tariff relief.

The company reiterated its 2025 outlook, expecting adjusted EPS of $5.10 to $5.45, compared with consensus of $5.42. It projects free cash flow between $6.3 billion and $6.8 billion, aligning with the Street's $6.64 billion estimate.

Poponak noted that GE's guidance "absorbs an assumption for increased costs from tariffs and lower air traffic growth for the remainder of the year," yet the firm still expects to offset those pressures through strong pricing and cost control.

End-of-quarter backlog stood above $170 billion, with over $140 billion tied to commercial services, providing strong forward visibility.

Excluding the 10.6% spike on April 9 tied to investor excitement about a 90-day tariff pause, Tuesday's rally is on track to mark GE Aerospace's strongest one-day gain since Jan. 23, when the stock jumped 6.6% following fourth-quarter 2024 earnings.

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