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GE Aerospace (GE) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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GE Aerospace (GE)

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Intrinsic Value (DCF)

Current$319.94
→
Intrinsic$122.54
-62%
$79.91$122.54$207.24
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $80 → Bull $207. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $207).
Discount ↓Growth →21%23%25%27%
8%$157$170$184$199
10%$105$113$123$132
12%$77$83$90$97
14%$60$65$70$76

Bull Case

  • Bull case ($207) with 30% growth, 8% discount rate

Bear Case

  • Bear case ($80) implies 75% downside at 20% growth, 12% discount
  • Trading 62% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($207) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$4.60B
Year 2$5.75B
Year 3$7.18B
Year 4$8.98B
Year 5$11.22B
Terminal$177.86B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.68BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is GE stock undervalued or overvalued?
🔴 OVERVALUED

GE trades at $319.94 vs. our DCF-derived intrinsic value of $81.41, implying -75% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($123.75) suggests limited upside.

What is GE's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.68B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $6.76B net debt and dividing by 1.09B shares: Bear $52.52 | Base $81.41 | Bull $123.75. Current price $319.94 implies -75% to base case.

How is GE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($95.82B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.