GE Aerospace has a Backlog Worth $210 Billion. Here's Why I'm Still Not Buying

1 hour ago 2

Reuben Gregg Brewer, The Motley Fool

Sun, July 26, 2026 astatine 6:35 PM CDT 4 min read

Benjamin Graham, who helped bid Warren Buffett, often talked astir the quality betwixt a institution and a stock. Graham had a saying that, to paraphrase, adjacent a bully institution tin beryllium a atrocious concern if you wage excessively overmuch for it. That's the lens done which I presumption GE Aerospace (NYSE: GE) today. Here's wherefore I wouldn't bargain the stock, contempt the company's concern success.

The aboriginal is close successful beforehand of you

The large fig for GE Aerospace is its $210 cardinal backlog. That's a monolithic number, representing the aboriginal income the institution already has lined up. Adding to the allure of that fig is that it comprises 2 income streams: merchandise income and services.

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Engineers moving connected airplane engine.

The aerospace company's pitchy engines are costly and are ordered years successful advance. But each pitchy motor sold indispensable beryllium maintained, generating an annuity-like parts-and-services income watercourse for GE Aerospace. And each caller motor sold conscionable adds to the parts-and-services business. There's nary question that GE Aerospace has a agleam aboriginal ahead. And it is doing precise good already, with adjusted revenues up 24% twelvemonth implicit twelvemonth successful the 2nd 4th of 2026, and net up 22%.

I don't person immoderate occupation with the business. My contented with GE Aerospace is the valuation.

GE Aerospace looks costly to maine

I person an income absorption and a worth bias. Starting with the income broadside of the equation, GE Aerospace's dividend output is simply a miserly 0.5%. That's adjacent little than the S&P 500 index's (SNPINDEX: ^GSPC) 1% yield. Like galore dividend investors, I similar yields successful the 4% area, though I'll marque exceptions for stocks that look inexpensive comparative to their ain histories.

GE Aerospace's past is simply a spot complex, arsenic you mightiness expect fixed General Electric's monolithic restructuring. Essentially, GE Aerospace is what was near aft a bid of plus income and spin-offs. Still, the stock's price-to-sales ratio is 7.2x compared to a five-year mean of 2.1x. Its price-to-earnings ratio is 41x compared to a five-year mean of astir 30x. And its price-to-book worth ratio is 20.5x compared to a five-year mean of 4.5x. There are a batch of moving parts, but it is beauteous evident that GE Aerospace isn't cheap.

The astir 300% terms beforehand implicit the past 3 years has thing to bash with that, of course. Investors person intelligibly been pleased with the GE overhaul and GE Aerospace's concern performance. However, with the S&P 500's mean P/E ratio astatine 27.5x and its mean P/B ratio astatine 5.4x, it is besides precise wide that investors are pricing successful a batch of bully quality for GE Aerospace comparative to its caller past and the broader market.

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