GE Stock Forecast: GE Aerospace DCF Valuation Report
Highlights
The base-case DCF implies an equity value of $182.4B and an implied share price of $173.04, compared with the July 2, 2026 market close of $377.52. This represents -54.2% downside to intrinsic value, or the market price is approximately 118.2% above the model-derived value. The report therefore classifies GE as overvalued.
Company Overview
GE Aerospace is now the public GE entity following the separation of the legacy General Electric portfolio. The business is a focused aerospace franchise centered on commercial aircraft engines, engine services, defense propulsion, and related aerospace systems.The investment case is primarily built on installed-engine economics. Engines are sold into aircraft fleets, while aftermarket maintenance, spare parts, repairs, and overhaul activity can produce recurring, high-visibility revenue over the life of the fleet. This is why the market often values GE Aerospace more like a durable aviation-services compounder than a traditional cyclical industrial manufacturer.
For 2025, GE Aerospace reported adjusted revenue of $42.3B, operating profit of $9.1B, adjusted EPS growth of 38%, free cash flow of $7.7B, and a backlog of roughly $190B. The company also reported strong first-quarter 2026 momentum, including total orders of $23.0B, adjusted revenue of $11.6B, and a $170B commercial services backlog.
Projected Revenue
The forecasts revenue is shown by calculating the average of the last five historical year-over-year growth rates and then applying that rate as a constant forecast assumption. The calculated average revenue growth rate is 14.4%. On this basis, adjusted revenue rises from $42.3B in 2025A to $82.9B in 2030E, a cumulative increase of 95.9%.
Model Assumption
The most important valuation drivers are revenue growth, operating margin expansion, free-cash-flow conversion, WACC, and terminal growth. The beta and WACC calculations come directly from the model.
| Assumption | Model Input |
| Valuation date | July 2, 2026 |
| Current share price | $377.52 |
| Revenue growth | 14.4% |
| Diluted shares | 1,054mm |
| Net debt | $9.3B |
| Tax rate | 15.0% |
| Beta | 1.35x |
| Risk-free rate | 4.49% |
| Equity risk premium | 4.42% |
| Cost of equity | 10.46% |
| After-tax cost of debt | 4.45% |
| WACC | 10.17% |
| Terminal growth | 3.0% |
GE Stock Forecast: DCF Model Analysis
The terminal value accounts for 76.6% of enterprise value. That is common in long-duration DCFs, but it also means the output is highly sensitive to WACC and terminal growth. The market is valuing GE at approximately 49.7x 2026E unlevered FCF, while the base-case DCF enterprise value equates to 23.4x 2026E unlevered FCF. The gap is the core reason the model concludes the stock is overvalued. Revenue and Unlevered FCF growth are already strong in the workbook: 2030E revenue reaches $82.9B and 2030E unlevered FCF reaches $16.6B. Therefore, the overvaluation conclusion is not driven by a low revenue-growth assumption; it is driven by the cash-flow yield required to justify the current market price.
| Valuation bridge | Value |
| PV of explicit UFCF | $44.9B |
| PV of terminal value | $146.7B |
| Enterprise value | $191.7B |
| Less: net debt | $9.3B |
| Equity value | $182.4B |
| Diluted shares | 1,054mm |
| Implied share price | $173.04 |
The base-case DCF implies an equity value of $182.4B and an implied share price of $173.04, compared with the July 2, 2026 market close of $377.52. This represents -54.2% downside to intrinsic value.
Sensitivity Analysis
To justify the current $377.52 price using this DCF structure, the model would need assumptions outside the base case. At a 3.0% terminal growth rate, WACC would need to fall to approximately 6.49%. Alternatively, at the base-case WACC of 10.17%, terminal growth would need to rise to approximately 7.15%. Both are aggressive relative to the assumptions.
Risk Analysis
| Risk | Why it matters for valuation | Potential impact |
| Forecast-growth risk | The forecast applies the 14.4% five-year historical average as a constant rate. The historical period includes recovery dynamics and portfolio changes, so a normalized rate could be lower. | Lower revenue trajectory, lower terminal FCF, and lower DCF value. |
| Terminal-value risk | Terminal value contributes 76.6% of enterprise value. | Small changes in WACC or terminal growth can materially change fair value. |
| Supply-chain / production risk | GE identified macro, supply-chain, production, pricing, and delivery risks in its forward-looking statements. | Engine deliveries, services revenue, and margin expansion could miss expectations. |
| Commercial aviation cycle risk | Demand depends on airlines, airframers, air travel, fuel prices, and customer financial health. | Shop visits or engine orders may be deferred in a downturn. |
| LEAP and aftermarket execution risk | The market is capitalizing expected LEAP installed-base growth, shop visits, and aftermarket expansion. | If the ramp is delayed, the premium services-growth narrative weakens. |
| Defense program risk | Defense growth depends on government budgets, program timing, and contract execution. | Revenue and margin timing could shift or disappoint. |
| Multiple / interest-rate risk | At high EV/FCF and forward earnings multiples, valuation is vulnerable to higher discount rates or lower growth expectations. | Even solid operating results may not prevent share-price compression. |
GE Stock Forecast: Conclusion
Based on the DCF model, GE Aerospace is overvalued at $377.52. The base-case implied value is $173.04, equal to -54.2% downside from the market price used. Overvalued under the DCF framework. A more attractive entry point would require either a meaningful share-price pullback, evidence that long-run free cash flow is structurally above the model, or a justified reduction in the discount rate used for the business.
The reason the market may still support the high price is the quality of GE Aerospace’s backlog, services-driven economics, strong recent execution, and investor confidence in LEAP and defense growth. Those are real positives. The valuation issue is that much of that strength already appears embedded in the share price.
GE Stock Forecast: It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for all forecast horizones.
To subscribe today click here.
Please note-for trading decisions use the most recent forecast.
