-0.73%<\/span>)<\/span> stock be in three years? This intriguing question arises as the company recently outlined its outlook for 2028, detailing the market fundamentals and operating conditions that will drive its growth. While accepting these assumptions is one aspect, investors must also consider the investment proposition GE Aerospace will present as we look toward 2028. Here\u2019s a perspective on how that might unfold.<\/p>\n<h2>GE Aerospace in 2028<\/h2>\n<p>During its second-quarter earnings call, management provided an update on its 2028 outlook, revealing significant improvements over the projections shared last year during GE's investor day presentation.<\/p>\n\n<div class=\"table-responsive\">\n <table>\n <thead>\n <tr>\n <th>\n <p><strong>Metric<\/strong><\/p>\n <\/th>\n <th>\n <p><strong>Outlook as of Investor Day 2024<\/strong><\/p>\n <\/th>\n <th>\n <p><strong>Current Outlook<\/strong><\/p>\n <\/th>\n <\/tr>\n <\/thead>\n <tbody>\n <tr>\n <td>\n <p>Adjusted revenue growth<\/p>\n <\/td>\n <td>\n <p>High single digit*<\/p>\n <\/td>\n <td>\n <p>Double-digit growth**<\/p>\n <\/td>\n <\/tr>\n <tr>\n <td>\n <p>Adjusted operating profit<\/p>\n <\/td>\n <td>\n <p>$10 billion<\/p>\n <\/td>\n <td>\n <p>$11.5 billion<\/p>\n <\/td>\n <\/tr>\n <tr>\n <td>\n <p>Free cash flow (FCF)<\/p>\n <\/td>\n <td>\n <p>$7 billion<\/p>\n <\/td>\n <td>\n <p>$8.5 billion<\/p>\n <\/td>\n <\/tr>\n <\/tbody>\n <\/table>\n<\/div>\n<p class=\"caption\">Data source: GE Aerospace presentations. *Compound annual growth 2024-2028. **Compound annual growth 2025-2028.<\/p>\n\n<p>To contextualize these figures, GE's current <a href=\"https:\/\/www.fool.com\/terms\/i\/implied-market-cap\/\">market cap<\/a> stands at $317 billion, indicating that GE will trade at 36 times <a href=\"https:\/\/www.fool.com\/terms\/f\/free-cash-flow\/\">FCF<\/a> by 2028. This valuation is substantial, and investors are not purchasing the stock based on the assumption that the company will merely reach $8.5 billion in FCF by 2028 and then generate low single-digit growth thereafter.<\/p>\n\n<p>Instead, investors are banking on GE's dominant position in commercial airplane engines, which is expected to yield decades of growth from lucrative, higher-margin service sales.<\/p>\n<p>They have a valid point.<\/p>\n\n<h2>GE Aerospace's Long-Term Growth Opportunity<\/h2>\n<p>The company's business model hinges on embedding its engines in the programs of major airplane manufacturers, primarily <strong>Boeing<\/strong> and <strong>Airbus<\/strong>, and subsequently ramping up engine sales to <a href=\"https:\/\/www.fool.com\/investing\/stock-market\/market-sectors\/industrials\/airline-stocks\/\">airlines<\/a> ordering aircraft. Given that engines can operate for up to 40 years, each engine installed on an aircraft creates a multidecade opportunity for service sales, typically generated through \"shop visits.\"<\/p>\n\n<div class=\"image\">\n <img alt=\"Airplane in flight.\" loading=\"lazy\" src=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F834716%2Fgettyimages-912360406-1.jpg&op=resize&w=700\" srcset=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/gettyimages-912360406-1.jpg&w=300&op=resize 300w, https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/gettyimages-912360406-1.jpg&w=1000&op=resize 1000w, https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/gettyimages-912360406-1.jpg&w=2000&op=resize 2000w\"\/>\n <p class=\"caption\">Image source: Getty Images.<\/p>\n<\/div>\n\n<p>The term \"shop visits\" may require clarification, as they are not frequent occurrences. Typically, an engine undergoes two or three shop visits throughout its lifetime, during which it is brought in for comprehensive maintenance, repair, and overhaul (MRO).<\/p>\n\n<p>The business model and GE's stronghold in commercial aerospace strongly support the notion of long-term growth. For instance, GE's joint venture with <strong>Safran<\/strong>, CFM International, produces the LEAP engine, the sole engine option for the Boeing 737 MAX and one of two options for the Airbus A320neo family. These aircraft are the modern narrowbody workhorses of the skies.<\/p>\n\n<h2>Narrowbody Engine Profit Set to Grow Significantly by 2028<\/h2>\n<p>A CFM engine (CFM56) also powers the legacy <a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/stocks\/how-to-invest-in-boeing-stock\/\">Boeing<\/a> 737s and is an option for the legacy A320 family of aircraft. Consequently, CFM engines account for approximately 75% of narrowbody flight departures, and GE will continue to generate service revenue from the CFM56 for many years as it builds on services revenue from the LEAP engine.<\/p>\n\n<p>Management anticipates that the fleet of LEAP engines will triple by 2030, with profits from LEAP and the older CFM56 engines expected to be equivalent by that year. To illustrate the ongoing profit potential from the CFM56, CFO Rahul Ghai highlighted during the second-quarter earnings call that \"approximately 40% of the CFM56 fleet has yet to undergo a first shop visit. A majority of operators expect to keep these engines in service well into the 2030s.\"<\/p>\n\n<p>Overall, management projects a 70% increase in narrowbody profit by 2028.<\/p>\n\n<div class=\"image\">\n <img alt=\"Airplane in flight.\" loading=\"lazy\" src=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F834716%2Faerospace-stocks-to-buy-in-2025.jpg&op=resize&w=700\" srcset=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/aerospace-stocks-to-buy-in-2025.jpg&w=300&op=resize 300w, https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/aerospace-stocks-to-buy-in-2025.jpg&w=1000&op=resize 1000w, https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/aerospace-stocks-to-buy-in-2025.jpg&w=2000&op=resize 2000w\"\/>\n <p class=\"caption\">Image source: Getty Images.<\/p>\n<\/div>\n\n<h2>Widebody Engine Profit is Also Set to Play a Significant Role<\/h2>\n<p>GE maintains a dominant position in widebody aircraft, powering over 50% of widebody departures. Its engines are featured on the Boeing 777 (GE90 engine), the Boeing 787 Dreamliner (GEnx), and will be utilized in the upcoming Boeing 777X (GE9X).<\/p>\n\n<p>Similar to the older CFM56 on narrowbody engines, investors should not underestimate the potential for the GE90 to contribute significantly to profits for years to come. Ghai noted that 70% of the GE90 fleet has \"yet to undergo a second shop visit.\" This is particularly noteworthy, as Ghai mentioned that \"the scope for widebody shop visits typically increases by about 50% during the second shop visits.\"<\/p>\n\n<p>Consequently, management anticipates a 40% increase in widebody profit by 2028.<\/p>\n\n<div class=\"image\">\n <img alt=\"A relaxed investor.\" loading=\"lazy\" src=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F834716%2Frelaxed-investor-watching-stocks-analyst-1200x800-5b2df79-1.jpg&op=resize&w=700\" srcset=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/relaxed-investor-watching-stocks-analyst-1200x800-5b2df79-1.jpg&w=300&op=resize 300w, https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/relaxed-investor-watching-stocks-analyst-1200x800-5b2df79-1.jpg&w=1000&op=resize 1000w, https:\/\/g.foolcdn.com\/image\/?url=https%3A\/\/g.foolcdn.com\/editorial\/images\/834716\/relaxed-investor-watching-stocks-analyst-1200x800-5b2df79-1.jpg&w=2000&op=resize 2000w\"\/>\n <p class=\"caption\">Image source: Getty Images.<\/p>\n<\/div>\n\n<h2>What It Means to Investors<\/h2>\n<p>In summary, GE anticipates substantial profit growth by 2028, driven by favorable dynamics in its commercial aerospace sector. While the current valuation may seem high, a snapshot of GE in 2028 is likely to reveal a company beginning to ramp up LEAP service revenue as CFM56 sales taper off. On the widebody front, the Boeing 777X should be well into operation, and investors will start to factor in future revenue from the GE9X.<\/p>\n\n<p>Thus, GE in 2028 is expected to be a company growing earnings at a mid-teens rate, with a dominant market position and a business model that promises many years of secure growth ahead. This outlook may well justify its current valuation.<\/p><\/code><\/pre>\n<\/div>\n","protected":false},"excerpt":{"rendered":"The aerospace giant’s business model ensures many decades of recurring revenue ahead of it. Where will GE Aerospace (GE -0.73%) stock be in three years? This intriguing question arises as the company recently outlined its outlook for 2028, detailing the market fundamentals and operating conditions that will drive its growth. While accepting these assumptions is […]<\/p>\n","protected":false},"author":1,"featured_media":1853,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[],"class_list":["post-1852","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stocks"],"_links":{"self":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/1852","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/comments?post=1852"}],"version-history":[{"count":0,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/1852\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media\/1853"}],"wp:attachment":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media?parent=1852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/categories?post=1852"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/tags?post=1852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}