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GE · Forward model · Defense & Propulsion Technologies · Bear case

What has to happen in Defense & Propulsion Technologies

Model as of

This page changes Defense & Propulsion Technologies inside the complete GE model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

GE forward model
Horizon
Consolidated fair value $157.93 all other verticals held in this portfolio case
Final-quarter revenue $3.54B 25% of company revenue
Explicit segment contribution $5.72B EBITDA less segment capex, before corporate items

The supply chain relapses or air traffic turns, and the mix problem the basis quarter already showed gets worse. Growth is being bought with dilutive install engines including GE9X: CES operating margin fell 160 basis points year on year even in a 27% growth quarter. Take a point a quarter off growth, two points off margin, and let a cyclical franchise held at 29x EBITDA normalise to 16x, and fair value is $157.93 - 53.0% below the traded price. This is not a demand collapse; it is the aftermarket ramp arriving slower and at lower margin than the guided year implies.

Defense & Propulsion Technologies

Basis quarter$3.44B
Final quarter$3.54B
Implied CAGR+1%
Final revenue mix25%

Military propulsion and Avio Aero: F110, F404, F414, T700 and T901 engines, next-generation adaptive-cycle programmes such as the XA102 and GE426, and the Aeroderivative business moved in from CES for 2026. Contract-priced and budget-paced rather than fleet-paced, it runs at roughly half the CES operating margin and grew 16% in the basis quarter against CES's 27%.

Last four quarters
2026 Q1 $3.21B Reported
2026 Q2 $3.44B Reported
Defense & Systems equipment and servicesPropulsion & Additive Technologies (including Avio Aero)Aeroderivative (moved from CES effective 2026)
Sequential growth +1.4%/qtr decaying toward +1.0% Lands 2026 DPT revenue where GE's low-double-digit growth guide puts it.
Defense & Propulsion Technologies

Latest: $3.54B (2031Q2E)

Period Value
2026Q1 $3.21B
2026Q2 $3.44B
2026Q3E $3.46B
2026Q4E $3.47B
2027Q1E $3.48B
2027Q2E $3.49B
2027Q3E $3.50B
2027Q4E $3.50B
2028Q1E $3.51B
2028Q2E $3.51B
2028Q3E $3.52B
2028Q4E $3.52B
2029Q1E $3.53B
2029Q2E $3.53B
2029Q3E $3.53B
2029Q4E $3.53B
2030Q1E $3.54B
2030Q2E $3.54B
2030Q3E $3.54B
2030Q4E $3.54B
2031Q1E $3.54B
2031Q2E $3.54B

Assumptions & reasoning

  • EBITDA margin is GE's guided full-year 2026 DPT operating profit of $1.65bn midpoint on model revenue of $13.7bn - about 12.1%, against a first-half actual of 12.8% - plus about 1.5% of revenue for depreciation and amortisation. The guided year is below the 13.8% second-quarter print because the fourth quarter has been the weak one: DPT margin was 8.9% in 2025 Q4 against 13.6% in 2025 Q3.
  • Propulsion & Additive Technologies revenue rose 23% in the basis quarter on Avio Aero while Defense & Systems rose 12%, so the growth is in the smaller half of the segment and it is the half GE has just enlarged.
  • Same two-quarter history limit as CES and for the same reason: the Aeroderivative transfer redefined this segment for 2026 and GE has never recast 2025 Q3 or Q4. The recast lifted 2025 Q2 DPT from $2,563m to $2,978m, a 16% difference, so splicing the old series in would be a basis error.
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