Bristol Gate Capital Partners Inc. on GE Aerospace
Thesis
Bristol Gate maintained exposure to GE Aerospace despite a sharp stock-price decline alongside the broader industrial sector. Adjusted earnings per share rose 22%, and management raised full-year earnings and free-cash-flow guidance. Sell-side estimates and price targets also moved higher, indicating resilience in underlying operating expectations. The company’s planned $11.75 billion acquisition of Consolidated Precision Products is intended to secure turbine-blade supply. The manager discusses this supply-chain step as an important strategic development amid challenges to investor sentiment.
“GE Aerospace fell 16.3% despite growing adjusted earnings per share 22% and raising its full-year earnings and free-cash-flow guidance.”
Key risks
- Execution and capital-allocation risk from the $11.75 billion precision-castings acquisition.
- SpaceX plans to internalize turbine-blade casting, changing the industry supply backdrop.
- Industrial-sector weakness could keep the valuation under pressure despite stronger earnings.