What a time it’s been for GE Aerospace. In the past six months alone, the company’s stock price has increased by a massive 47.8%, reaching $283.30 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is GE a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive On GE Aerospace?
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE: GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
1. Skyrocketing Revenue Shows Strong Momentum
Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. GE Aerospace’s annualized revenue growth of 13.9% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
GE Aerospace has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 19.2% over the last five years.
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, GE Aerospace’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we think GE Aerospace is a high-quality business, and after the recent rally, the stock trades at 48× forward P/E (or $283.30 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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