Why GE Stock Looks Priced to Perfection
With GE (GE) still changing hands at a rather high valuation and facing significant, longer-term threats to its main business from the situation in the Mideast, the shares look priced to perfection at this point. Consequently, I do not believe that the name is especially attractive for investors.
In a previous column , published last October, I noted that the company’s forward price-earnings ratio, which was then 44, was rather elevated, especially because analysts on average expected the firm’s “revenue growth to slow markedly to 10.8% (in 2026) from 15.7% in 2025 “
Since that piece was published, the shares rose about 8%, significantly underperforming the S&P 500’s increase of 13.5% during the same time period.
Boding well for the name’s outlook, its forward P/E ratio has dropped significantly to 36, and analysts on average now expect its sales to climb 18.8% this year.
But on the other hand, GE is facing significant potential threats from the situation in the Middle East, and analysts’ mean estimate calls for its top-line growth to fall to 10.7% in 2027.
This time, because of the hostilities between America and Israel on the one hand and Iran on the other, their call for next year may very well turn out to be correct.
The Iran Conflict Could Significantly Slow GE’s Growth
GE obtains about 75% of its revenue from commercial aviation entities, and much of these funds come from maintaining and repairing airplane engines.
But after jet fuel prices climbed a great deal due to the conflict between America and Israel on the one hand and Iran on the other, airlines are flying less as their ticket prices increase, lowering demand for flight.
Consequently, they are likely to need less maintenance and repairs over the longer term.
Showing that airlines are indeed curtailing their flying,. GE in April reduced its forecast for the increase in the number of departures of planes using its engines in 2026 to around 0%-3%. Previously, the company had expected an increase of roughly 5%.
If the conflict heats up again following the U.S. and Israeli elections, scheduled to take place in late October and early November, respectively, the price of jet fuel could surge again, causing airlines to further cut back their flying schedules and lowering GE’s service and maintenance revenue.
GE’s Valuation Is Not Low
The shares are not cheap, as they are changing hands at a forward price-to-earnings ratio of nearly 37 times.
For more information, please view my previous column .
I do not currently have a position in GE.
