Most companies go shopping when growth starts to fade. GE Aerospace (NYSE:GE) went shopping with revenue still climbing more than 20%. Last month, the jet-engine maker agreed to buy Consolidated Precision Products/CPP, a Cleveland-based maker of superalloy and titanium castings, for $11.75 billion. GE has been a CPP customer for more than 15 years. Now it wants to own the foundry.
If you’ve boarded a single-aisle jet lately, there’s a good chance a GE engine was under the wing, or a LEAP built through its CFM venture with Safran. GE sells those engines once, but the real money arrives afterward: years of overhauls, shop visits, and spare parts as airlines keep fleets in the air. That high-margin aftermarket moat often sets up a direct head-to-head in GE Aerospace (GE) vs. RTX (RTX). The stock already carries a hefty premium, and whether that premium holds up depends less on demand, which isn’t the problem, than on whether GE can build fast enough to meet it.
Sold Once, Serviced for Decades
The moat here is the installed base. Every engine GE delivers becomes a long-running services customer, and that flywheel is spinning hard. In the second quarter of 2026, services revenue in the Commercial Engines & Services segment rose 26%. Internal shop visit revenue climbed 25%, and spare parts sales grew more than 25%. Total orders reached $16.5 billion, up 17%. CEO Larry Culp also pointed to a backlog of more than $210 billion, meaning contracted work not yet booked as revenue. That gives the business years of visibility, built on long sustainment relationships, a model defense heavyweight Lockheed Martin also leans on.
Demand Isn’t the Constraint
The quarter itself was loud. Revenue hit $13.3 billion, up 21%. Adjusted EPS rose 22% to $2.02, and free cash flow jumped 43% to $3.0 billion. In the first half, total engine deliveries rose 31%, with LEAP deliveries up 41%.
Management raised its outlook across the board. Revenue in the commercial segment is now expected to grow about 20%, up from the mid-teens. Operating profit is guided to $10.25 billion to $10.35 billion, up from $9.6 billion to $9.9 billion.
That context explains the CPP deal. GE describes it as adding mission-critical casting capacity for new engines, aftermarket work, and defense. It plans to run its FLIGHT DECK operating system across CPP’s more than 20 facilities to lift output and quality. Owning more of the supply chain is the logic behind a lot of aerospace stocks chasing record backlogs.
Is GE Paying Too Much for Capacity?
The skeptic’s case is real. GE values CPP at about 26 times 2027 EBITDA before synergies, or around 18 times with them. It is funding the deal with $7 billion in cash plus new debt. The deal also isn’t expected to close until the second half of 2027, so the payoff comes later. Margins are also slipping as volumes surge. Operating profit margin fell 130 basis points to 21.7% in the quarter, and the commercial segment’s margin shrank 160 basis points. GE says the deal should add to adjusted EPS and free cash flow in its first year, and that its capital allocation plans haven’t changed. With $3.0 billion of quarterly free cash flow, the balance sheet can absorb it. The margin trend is the part to watch.
Pricey, Just Not Unusually So
At 38.90 times forward earnings, as of October 9, GE trades far above the sector’s 18.80. That’s the headline worry. But the stock’s own 5-year average P/E sits at 40.62, so today’s multiple is a touch below what investors have typically paid for it.
The harder question is growth. Analysts expect EPS to grow 14.85% in 2027, slower than the 22% adjusted gain in the second quarter. Paying 38.90 times earnings for mid-teens growth leaves little room for a stumble. This valuation leans on adjusted EPS, because it tracks the core engine business more closely than GAAP EPS, which came in higher at $2.30. For contrast, a younger name like Firefly Aerospace is priced on a very different set of hopes, with far less of today’s cash flow behind them. Hedge fund interest cooled slightly, with 113 funds holding GE in the most recent quarter, down from 119 in the prior one. Short interest stands at 1.52% of float, which points to fairly limited bearish positioning.
Paying for the Aftermarket
The evidence points to a premium the services engine has largely earned, not a bargain. GE isn’t cheap against the sector, but it isn’t stretched against its own history either. The CPP deal also targets the one thing that seems to be capping growth: production capacity. That setup suits long-term investors comfortable paying up for a decades-long aftermarket. If margins keep sliding while volumes rise, or CPP’s integration stumbles after closing, that 38.90 multiple would get much harder to defend.
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