Think GE Aerospace Stock Is Expensive? This Chart Might Change Your Mind.

GE Aerospace (NYSE: GE) stock trades up more than 60% year to date, and it's understandable if investors are starting to think it might be overvalued. However, the company's second-quarter earnings just revealed something that strengthens the investment thesis for long-term investors.Aerospace companies are typically not judged on near-term earnings, but rather on their potential for a long-term stream of recurring revenue from higher-margin services. In this case, it's GE's commercial aerospace engines.The typical model in the industry is that engines are initially sold at a loss, which reflects the long-term development costs as well as production costs, known as the negative engine margin. However, as they can be run for over 40 years, they generate a lucrative stream of aftermarket revenue when they periodically require "shop visits" for maintenance, repair, and overhaul (MRO).Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool