GE Aerospace Beats Q3 Estimates and Raises 2026 Guidance, but Shares Fall 4% as Free Cash Flow Drops

GE Aerospace beat third-quarter expectations on Tuesday, October 20, reporting adjusted EPS of $2.25 against a consensus of about $2.01 and adjusted revenue of $13.29 billion against roughly $12.88 billion expected. On a GAAP basis, total revenue rose 16% to $14.1 billion and continuing EPS was $2.32, according to the company's earnings release. Total orders jumped 49% to $19.0 billion, led by Commercial Engines & Services, where orders rose 58% to $15.3 billion and revenue climbed 21% to $10.3 billion. Defense & Propulsion Technologies revenue grew 7% to $3.5 billion.

Management raised guidance across the board. GE now expects 2026 adjusted EPS of $8.00 to $8.10, up from $7.65 to $7.85, operating profit of $10.9 billion to $11.0 billion (from $10.55 billion to $10.75 billion), free cash flow of $9.1 billion to $9.4 billion (from $8.9 billion to $9.2 billion) and adjusted revenue growth of about 19% to 20%. Quarterly operating profit rose 30% to $3.0 billion, with margin up 220 basis points to 22.5%. On the call, CEO Larry Culp said the company now expects commercial services to grow at a low double-digit rate in 2027.

The stock went the other way. Shares fell about 4% to near $298 by early afternoon from a $311.28 prior close, and Schaeffer's Investment Research tied the drop to cash flow: free cash flow fell 14% to $2.0 billion and operating cash flow fell 14% to $2.2 billion. Coverage also pointed to a valuation near 37 times earnings, Melius cutting its price target to $350 from $432, and a pattern of the stock declining after each of its last three reports as investors look for reassurance on aftermarket demand. Defense and aerospace peers RTX and BA were roughly flat in the morning, which points to a company-specific reaction.

Note that some outlets compared the $14.1 billion GAAP figure with the adjusted-basis consensus, which makes the revenue beat look close to 10%; on a like-for-like adjusted basis it was about 3%. What to watch: whether fourth-quarter cash generation tracks the raised $9.1 billion to $9.4 billion full-year free cash flow range, how quickly the order surge converts into engine deliveries given supply-chain constraints, and whether services growth holds up to the low double-digit marker management set for 2027.