An independent two-stage DCF analysis by a frontier AI model.
Following its historic split into three distinct entities, GE Aerospace (GE) emerges as a remarkably focused, pure-play aerospace engine powerhouse. Dominating the widebody space with the GE90, GEnx, and GE9X, and capturing the narrowbody market via CFM International (LEAP engines), GE operates in a highly consolidated duopoly against Pratt & Whitney and Rolls-Royce.
The core of GE's valuation lies not in the initial engine sale, which is often sold at a loss, but in the incredibly lucrative, multi-decade aftermarket service contracts. As the global commercial fleet expands and ages, these long-term service agreements provide immense, highly visible free cash flow generation. Coupled with robust defense spending, GE Aerospace is positioned to be a supreme cash-compounding engine over the next decade.
<div class="assumption-grid" data-astro-cid-isxypzs4> <div class="assumption-card" data-astro-cid-isxypzs4> <div class="card-title" data-astro-cid-isxypzs4>FCF Growth Rate (Y1-Y5)
<div class="assumption-grid" data-astro-cid-isxypzs4> <div class="assumption-card" data-astro-cid-isxypzs4> <div class="card-title" data-astro-cid-isxypzs4>FCF Growth Rate (Y1-Y5)
<div class="assumption-grid" data-astro-cid-isxypzs4> <div class="assumption-card" data-astro-cid-isxypzs4> <div class="card-title" data-astro-cid-isxypzs4>FCF Growth Rate (Y1-Y5)
Intrinsic value per share under varying discount rate and terminal growth rate assumptions.
| WACC ↓ / Terminal → | 2.0% | 2.5% | 3.0% | 3.5% | 4.0% |
|---|---|---|---|---|---|
| 2.0% | $155.58 | $127.29 | $107.71 | $93.35 | $82.36 |
| 2.5% | $175.02 | $140.02 | $116.68 | $100.01 | $87.51 |
| 3.0% | $200.03 | $155.58 | $127.29 | $107.71 | $93.35 |
| 3.5% | $233.37 | $175.02 | $140.02 | $116.68 | $100.01 |
| 4.0% | $280.04 | $200.03 | $155.58 | $127.29 | $107.71 |
■ Undervalued vs current price ■ Overvalued vs current price
Gemini assumes a 12% growth rate due to GE Aerospace's dominant position in a duopoly market for commercial aviation engines. The company possesses an immense backlog, and its long-term service agreements provide high-margin, recurring revenue that scales as engine fleet utilization increases.
An 8.5% discount rate was selected. This is justified by GE's highly stable, wide-moat business model, a beta near 1.0, and the current 10-year treasury yield of 4.18%. The predictable nature of its service contracts warrants a relatively low cost of capital.
A 3.0% terminal growth rate was used. The commercial aerospace engine business is a long-cycle industry inherently tied to global travel demand, which is projected to slightly outpace global GDP growth over the long term.
Disclaimer: The numbers presented on this page are for educational and entertainment purposes only. They are the result of a deterministic mathematical model fed with assumptions generated by an Artificial Intelligence (Gemini 3.1). This does not constitute investment advice. Always conduct your own due diligence before investing in the stock market.