GE Aerospace (GE) and 3M (MMM) deliver strong third-quarter results as both raise full-year guidance.
General Electric’s GE Aerospace and 3M both delivered strong third-quarter earnings, each raising guidance and showing improvement in profitability. While GE is soaring on commercial engine demand, 3M is gaining ground through cost control and innovation. Here’s how the two industrial heavyweights stack up.
Key Takeaways
- GE Aerospace reported record Q3 results and raised FY25 guidance.
- 3M posted margin gains and strong organic growth driven by innovation.
- Both companies improved profitability but face valuation and macro challenges.
GE Aerospace: Strong Momentum Lifts Guidance
GE Aerospace reported another quarter of record-breaking results, underscoring its leadership in commercial and defense aviation. Adjusted earnings per share came in at $1.66, up 44% year over year, and comfortably above Wall Street expectations of $1.46. Revenue surged 26% to $11.3 billion, fueled by robust aftermarket demand and engine deliveries.
The company raised its full-year 2025 earnings guidance to a range of $6.00 to $6.20 per share, up from $5.60 to $5.80, and boosted its free cash flow outlook to between $7.1 and $7.3 billion. This follows a year in which net profit margins rose to 18.3%, highlighting stronger cost control and efficiency.
Commercial and Defense Segments Drive Growth
Revenue in the Commercial Engines and Services segment jumped 27% to $8.9 billion, with services revenue up 28%. Operating profit in this division rose 35% to $2.4 billion, driven by higher shop visits and spare-parts demand. On the defense side, revenue climbed 26%, and profit rose 75% to $386 million.
New orders topped $10.3 billion, and engine deliveries were up 41% from last year. The company’s LEAP and GEnx programs continue to expand, supported by AI-enabled maintenance tools and strong international demand.
Valuation Remains a Debate
Despite the strong performance, GE trades at about 40 times forward earnings, a premium to the aerospace industry average of roughly 26 times. Analysts note that the premium reflects investor confidence in management’s ability to sustain margin expansion and earnings growth. Still, with shares hovering near all-time highs around $306, upside potential may be limited unless growth accelerates further.
3M: Margin Expansion and Innovation Lead the Turnaround
3M delivered a solid “beat and raise” quarter, signaling continued progress in its operational turnaround. The company posted earnings of $2.19 per share, up 10% year over year, beating estimates of $2.07. Revenue rose 4.1% to $6.3 billion, while organic sales grew 3.2% across all business segments.
Operating margins expanded by 170 basis points to 24.7%, thanks to productivity gains and improved supply chain efficiency. Free cash flow reached $1.3 billion, representing a strong 111% conversion rate. Management raised full-year EPS guidance to a range of $7.95 to $8.05, above its prior outlook.
Innovation and Product Launches Accelerate Growth
3M’s renewed focus on product innovation is paying off. The company launched 70 new products in the third quarter and 196 year-to-date, exceeding its Investor Day goal. CEO William Brown attributed this momentum to a cultural shift toward faster execution and greater urgency in bringing new ideas to market.
The Safety & Industrial business grew 4.1%, while the Transportation & Electronics division gained 3.6%. Even the Consumer segment posted modest growth at 0.3%, supported by strong sales of Filtrete filters and Scotch tape.
Challenges Still Ahead
Despite the positive results, 3M faces macro headwinds, including soft commercial vehicle demand and litigation risks. The company’s ongoing restructuring and portfolio optimization efforts are designed to streamline operations and expand margins beyond 25% by 2027. Analysts view 3M’s disciplined cost structure and innovation pipeline as key to sustaining its recovery through 2026.
Comparing the Two Giants: GE vs 3M
Both GE Aerospace and 3M delivered strong quarters, but their growth stories differ. GE’s surge is powered by aviation demand and aftermarket strength, while 3M’s gains come from operational efficiency and new products. GE’s valuation reflects high expectations, while 3M’s turnaround offers steady improvement at a more moderate multiple.
For investors, GE offers exposure to cyclical aviation growth, whereas 3M provides a diversified industrial footprint with improving fundamentals. Both raised guidance and demonstrated momentum, but GE carries higher risk tied to its concentrated aerospace business, while 3M offers a more balanced risk profile.
What It Means for Investors
For GE shareholders, the raised guidance and strong free cash flow outlook reinforce confidence in a multi-year growth cycle driven by commercial and defense demand. However, the premium valuation leaves less room for earnings disappointments.
For 3M investors, margin expansion, innovation momentum, and improving execution suggest a durable turnaround is underway. With its shares trading at more modest valuations, MMM could appeal to investors seeking steady returns and dividend reliability.
Ultimately, GE is the growth play, while 3M represents the comeback story — both attractive in their own right but catering to different investor risk appetites.
Conclusion
GE Aerospace and 3M both impressed investors with strong earnings and raised guidance for 2025. GE’s results highlight aviation leadership and expanding margins, while 3M’s focus on innovation and efficiency signals a sustainable turnaround. Whether investors prioritize high growth or steady execution, both companies remain key players in the industrial sector’s evolving landscape.
FAQs
What drove GE Aerospace’s earnings growth in Q3?
GE Aerospace’s 44% earnings growth was driven by record engine deliveries, strong aftermarket services, and increased demand in both commercial and defense segments.
Why did 3M raise its 2025 guidance?
3M raised its full-year guidance after delivering higher-than-expected margins, strong cash flow, and solid organic sales growth across its business lines.
Which stock has a higher valuation — GE or 3M?
GE currently trades at about 40 times forward earnings, while 3M’s valuation is more moderate. GE’s premium reflects high expectations for sustained aerospace growth.
Is GE’s growth sustainable?
Analysts believe GE’s growth is sustainable in the medium term due to rising commercial travel demand and defense contracts, though valuation risks remain.
Is 3M’s turnaround complete?
3M’s turnaround is ongoing, but operational and margin improvements suggest that the company is firmly on track toward its long-term goals.
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