GE Aerospace has a Backlog Worth $210 Billion. Here's Why I'm Still Not Buying
2026-07-26 23:15
•Reuben Gregg Brewer •The Motley Fool
•••• • Axe Capital view
Why I'm Sitting Out GE Aerospace Despite Its $210 Billion Backlog
GE Aerospace's strong growth story is overshadowed by extreme overvaluation and weak income potential.
GE Aerospace boasts an impressive $210 billion backlog and a 24% revenue growth rate, signaling robust business momentum. Still, the stock’s valuation is wildly stretched—trading at 41 times earnings and over 7 times sales, far above its historical norms. This kind of premium usually demands near-perfect execution and leaves little room for error. Adding to the disappointment is a paltry 0.5% dividend yield, which offers scant consolation to income seekers. The sharp 300% price surge over three years suggests the market has baked in all the good news already. For South African investors, this growth-heavy US tech play has no direct JSE analogue, making USD/ZAR movements more relevant for portfolio hedging than the stock itself. If the US tech outlook sours or GE stumbles, we could see sharp retracements, which would hurt dollars invested at these levels. this is just my opinion and not financial advice
I’m avoiding GE Aerospace at these valuations. Better to wait for a more reasonable entry price or better-yielding alternative exposures. For rand investors, watching USD/ZAR for broader tech vulnerability makes more sense.
- GE
- USD/ZAR
- Unexpected acceleration in aerospace demand lifting valuations even higher
- Macro shocks improving tech sector risk appetite and driving a rerate
6/10
Despite GE Aerospace's impressive $210 billion backlog, strong 24% revenue growth, and solid business fundamentals, analyst Reuben Gregg Brewer recommends against buying the stock. The company's valuation has become stretched, with price-to-sales, price-to-earnings, and price-to-book ratios all significantly above historical averages following a 300% price surge over three years. Additionally, the dividend yield of 0.5% is unattractive for income-focused investors. While GE Aerospace's future prospects are bright, current market pricing appears to have already factored in the good news.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Reuben Gregg Brewer
Categories: Rates, Equities, Earnings, Capital Returns
Tickers: GE
Sentiment: Negative - While the company's business fundamentals are strong with a $210 billion backlog and 24% revenue growth, the stock is overvalued relative to historical metrics and the broader market. The P/E ratio of 41x (vs. 30x historical average), P/S ratio of 7.2x (vs. 2.1x historical average), and minimal 0.5% dividend yield make it unattractive at current prices. The 300% three-year price appreciation has priced in future success, leaving limited margin of safety for investors.
Keywords: GE Aerospace, backlog, valuation, dividend yield, aerospace industry, stock overvaluation, price-to-earnings ratio
Insights:
- GE: Negative: While the company's business fundamentals are strong with a $210 billion backlog and 24% revenue growth, the stock is overvalued relative to historical metrics and the broader market. The P/E ratio of 41x (vs. 30x historical average), P/S ratio of 7.2x (vs. 2.1x historical average), and minimal 0.5% dividend yield make it unattractive at current prices. The 300% three-year price appreciation has priced in future success, leaving limited margin of safety for investors.