Here is my due diligence for GE Aerospace, I try and prepare such documents every quarter for my key investments.
The summary for GE Aerospace for Q2 is this:
a. The 4 main catalysts for this company are still intact, although some of these points are double-edged. GE will further optimise these so that we can expect further margin expansion in future. Eg. While the booking backlogs gives it visibility of the business, it also ties up cash and delays revenue recognition.
* Long term travel demand
* Supply chain issues with backlog at 4+ years.
* The Retirement rate of older planes is still at 2% (versus 4% norm)
* Fleet refresh by 2045.
b. Four addiitonal value investors joined the GE bandwagon from seven in the last quarter. They bought around $275 to $300+ This is me confidence that my valuation isn't that far off.
c. In terms of valuation, due to long visibility of the business (4 years backlog for GE, 8-12 years on Boeing and Airbus which uses GE engines), i used a 14% CAGR for 10 years, this gives me a fair value price of around 280+.
My conclusion is that it is too expensive right now to add more, and too cheap to sell. I will opt to sit tight.
[https://docs.google.com/document/d/165DlnfWJqiuYCGhGnqZkE8GYMSxQA5OQItRUir47R20/edit?usp=sharing](https://docs.google.com/document/d/165DlnfWJqiuYCGhGnqZkE8GYMSxQA5OQItRUir47R20/edit?usp=sharing)
***(Warning:*** *1. the document contains "AI-Slop". 2. the document isn't the whole thesis, there aren't any moat discussion or catalysts in detail, or management shareholder friendliness etc. This is just a quarterly due diligence article.)*
***TLDR: You have to use a desktop computer to view this.***
