Oct 20, 2026: a premarket gain reverses before the open
GE filed its results with the SEC at 6:30am. The stock jumped from about $309 to $320.14 by 6:35am, up 2.8%, then gave it back. By 7:30am, when the call started, it was about $306, and by 8:25am it had touched $297 as analysts asked about oil prices, delinquent spare parts and the GE9X.
It opened at $302.23 and fell to the day's low of $294.22 at about 9:35am, down 5.5%. The shares recovered mid-morning and reached a high of $307.36 at about 10:30am, cutting the loss to 1.3%. The rebound did not hold. At 11:50am the stock was $296.21, down 4.8%, on 4.5 million shares.
What pushed it down:
- Cash flow. Free cash flow of $2.04 billion was 14% lower than a year earlier. Ghai said "working capital was a use as receivables grew from timing of services billings and an increase in balance due from airframers." Schaeffer's Investment Research led its report with the cash decline.
- A softer fourth quarter. Year-to-date adjusted EPS is $6.13, so the $8.00 to $8.10 range leaves $1.87 to $1.97 for the fourth quarter, under the $2.02 estimate. The operating profit range implies $2.64 billion to $2.74 billion, below the $2.99 billion just reported.
- The 2027 setup. Ghai said GE9X losses should add "about another $300 million of headwind" in 2027 and that 2027 margins "should stay in line" with 2026. Commercial services growth is guided to low double digits, against 26% so far this year.
- Valuation. At $296.21 the stock trades at 36.8 times the $8.05 midpoint of 2026 EPS guidance. Investing.com said investors "had already priced in strong results," and The Motley Fool's Rich Smith put the stock "north of 36x FCF."
The decline was mostly specific to GE. Engine parts maker Howmet Aerospace fell further, but the rest of the group moved far less. At about 11:50am, against the Oct 19 close:
| Stock or fund | Change |
|---|---|
| Howmet Aerospace (HWM) | -5.4% |
| GE Aerospace (GE) | -4.8% |
| Aerospace and defense ETF (ITA) | -1.3% |
| Boeing (BA) | -0.9% |
| RTX (RTX) | -0.8% |
| HEICO (HEI) | -0.7% |
| S&P 500 ETF (SPY) | +0.4% |
| Safran ADR (SAFRY) | +0.6% |
We found no company news for Howmet on the day.
After the drop, RSI(14) stood at 32, the shares sat 9.7% below their 50-day average and 8.5% below their 200-day average, volume by 11:50am was 1.1 times its 20-day average, and the stock was 23.8% below its 52-week high of $388.84. Our page of today's biggest stock moves covers other names moving on the day, including why General Motors stock fell after its own beat.
The pattern after earnings
This was the fourth report in a row that the stock fell on the day:
| Report date | Earnings-day change |
|---|---|
| Jan 22, 2026 | -7.4% |
| Apr 21, 2026 | -5.6% |
| Jul 16, 2026 | -4.1% |
| Oct 20, 2026 | -4.8% (at 11:50am) |
Each of those reports beat the EPS consensus. The pattern says the shares price in a beat before the report. Our explainer on how guidance changes move stocks covers why a raise can still disappoint.
The numbers
| Q3 2025 | Q3 2026 | Change | |
|---|---|---|---|
| Total orders | $19.0B | +49% | |
| Adjusted revenue | $11.31B | $13.29B | +18% |
| Operating profit | $2.30B | $2.99B | +30% |
| Operating margin | 20.3% | 22.5% | +220 bps |
| Adjusted EPS | $1.66 | $2.25 | +36% |
| Free cash flow | $2.36B | $2.04B | -14% |
Commercial Engines & Services revenue rose 21% to $10.34 billion, with services up 17%, spare parts up over 20% and engine deliveries up 8%. Its margin slipped 10 basis points to 27.9% "from mix and inflation." Defense revenue rose 7%. GAAP profit margin fell 80 basis points to 19.9%, partly because the run-off insurance business swung to a $210 million loss from a $361 million profit. Our guide on how to read a cash flow statement explains why receivables growth cuts free cash flow even when profit rises.
The bull case
- Guidance up across the board. The EPS midpoint rose $0.30 to $8.05 and the operating profit midpoint rose $300 million. Culp said GE will "exceed our 2028 cash outlook here in 2026."
- Demand. Services orders rose 23%, faster than the 22% of the second quarter, and the commercial services backlog is over $170 billion. GE booked commitments for more than 1,800 engines at Farnborough.
- Visibility into 2027. Ghai said most of the engines needed for first-half 2027 shop visits are already in GE's shops and removals should rise more than 10%. CFM56 retirements are running at 1.5% to 2%, below the 2% to 3% expected at the start of the year.
- Analysts are above the price. The consensus target is about $387, roughly 30% above the 11:50am price.
The risks
- Valuation. The forward P/E is 32 and the stock trades at 37 times trailing free cash flow. Our explainer on forward and trailing P/E covers how to read those multiples, and our guide to free cash flow yield shows what a 2.7% yield implies.
- Allowances. Sales discounts and allowances stood at $5.60 billion on Sep 30, up from $4.04 billion at the end of 2025. The increase added $1.6 billion to operating cash this year, so part of the cash strength depends on reserves still to be used.
- Airline stress. On the call, Bernstein's Doug Harned noted Brent at $111. Culp said schedules "perhaps are being trimmed" but expects departures to grow in 2027.
- Supply. Ghai said "spare parts delinquency increased sequentially" even as material input rose for a tenth straight quarter.
What comes next
- GE9X certification. GE is working toward FAA certification of the upgraded midseal by the end of 2026. Revenue on engines already shipped waits on it.
- The CPP acquisition. The agreement to acquire castings maker Consolidated Precision Products is meant to add capacity for GE and the industry.
- Fourth-quarter results, expected around January 28, 2027. The report brings the full 2027 guide. Our guide to preparing for an earnings catalyst covers what to watch.