How the Iran Conflict Is Squeezing GE Aerospace's Outlook

GE Aerospace (NYSE: GE) just reported first-quarter earnings that beat Wall Street estimates. Highlights included an adjusted year-over-year revenue increase of 29% and a whopping 87% increase in orders spread across a 93% increase in commercial engines and services (CES) and a 67% increase in defense and propulsion technologies (DPT). However, the stock declined 4.5% on the day of the earnings release. There's something else going on here, and that "something" is the risk of a prolonged conflict in the Persian Gulf.It wasn't just a strong first quarter; management also expects an excellent second quarter with services growth in the high teens (a figure above the full-year guidance for mid-teens growth),  driven by the fact that "95% of the spare parts for second quarter are in the backlog. All the engines that we need to work on for second quarter are in the shop" according to CFO Rahul Ghai on the earnings call. In addition, CEO Larry Culp noted that its pipeline of "planned engine removals in the second and third quarters, combined with engines that are currently off wing, exceeds our shop visit guide." Shop visits are when engines are removed from aircraft and sent for maintenance, repair, and overhaul -- the single most important earnings driver for the company.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool