GENERAL ELECTRIC CO: orders up 49% but revenue up only 15.9% – growth decelerated and the stock trades 57% above its own history

On 20 October GENERAL ELECTRIC CO reported third-quarter 2026 results: revenue of $14,118 million (+15.9% year on year), EBITDA of $3,032 million (+11.1%) and net profit of $2,288 million (+6.1%). Revenue growth decelerated from 21.1% in the second quarter to 15.9%, the EBITDA margin narrowed from 22.4% to 21.5%, and one-off items propped up profit. Our conclusion: rather unattractive – the EV/EBITDA multiple of 31.9 is 57% above its own three-year average of 20.3, leaving almost no headroom. Our view: the share is rather unattractive at the current price; upside on the portal model +7%.

Our view: is there upside

Our view in numbers

Key takeaways

— Orders rose 49% to $19.0 billion, but revenue added only 15.9% – growth decelerated from 21.1%

— The EBITDA margin narrowed from 22.4% to 21.5% because costs grew faster than revenue

— One-off items supported net profit: adjusted profit is above reported profit

— Free cash flow fell 14% to $2.0 billion as capital expenditure rose

— Leverage of 1.06x EBITDA LTM is moderate, but the expensive stock leaves no cushion

— EV/EBITDA of 31.9 versus a three-year average of 20.3 – a 57% premium to its own history

— The portal model implies +7% upside – fairly valued, but with no margin of safety

Key figures, USD bn

Orders rose 49% to $19.0 billion, but revenue added only 15.9% – growth decelerated from 21.1%

The order book for the quarter reached $19.0 billion, 49% more than a year earlier. Commercial orders rose 58% to $15.3 billion, defence orders 18% to $4.3 billion. Such an inflow signals strong demand, but it converts into revenue with a lag.

Third-quarter revenue reached $14,118 million, up 15.9% year on year. That is slower than the 21.1% in the second quarter: the growth rate decelerated. Commercial engines and services brought in $10.3 billion (+21%), the defence unit $3.5 billion (+7%).

The deceleration reflects the base effect: a year earlier revenue grew 23.8%, making the comparison tougher. Yet annual growth remains in double digits, and orders are more than double quarterly revenue, supporting utilisation in future periods.

The EBITDA margin narrowed from 22.4% to 21.5% because costs grew faster than revenue

Quarterly EBITDA came to $3,032 million, 11.1% more than a year earlier. Profit growth lagged revenue growth, and the EBITDA margin fell from 22.4% to 21.5%.

Margin pressure came from cost inflation. In the commercial segment the operating margin slipped 10 basis points to 27.9% on mix and cost growth. In defence the margin added 20 basis points to 13.7% on volume and pricing.

A 0.9 percentage-point margin contraction alongside double-digit revenue growth means the company is not fully passing costs into prices. That caps profit growth: for EBITDA to accelerate, either services growth must speed up or cost inflation must ease.

One-off items supported net profit: adjusted profit is above reported profit

Quarterly net profit came to $2,288 million, 6.1% more than a year earlier. The growth is modest against double-digit revenue growth, and the reason is one-off items.

Adjusted (non-GAAP) profit reached $2,343 million, above reported profit. The $55 million gap came from charges and adjustments: the company booked a $210 million pre-tax loss in its insurance unit, $28 million of restructuring and $4 million of separation costs. These items lowered reported profit, so adjusted profit came out higher.

In other words, reported profit was not inflated by one-off gains – if anything, one-off charges held it back. But that does not improve the quality of growth: excluding one-offs profit would have risen more, yet the year-ago base included a large $361 million insurance gain, which explains the weak increase.

Free cash flow fell 14% to $2.0 billion as capital expenditure rose

Quarterly operating cash flow came to $2,152 million, 14% less than a year earlier. Free cash flow (non-GAAP) fell by the same 14% to $2,042 million.

Capital expenditure rose to $336 million from $307 million a year earlier. The company also spent $27 million on separation costs and $27 million on restructuring. Together these outflows explain the decline in free cash flow despite revenue growth.

For the nine months, operating cash flow rose 14% to $7,329 million and free cash flow 13% to $6,728 million. The quarterly decline looks like a reversal after a strong second quarter, when cash flow reached $3,195 million. The company still has room for dividends and buybacks, but the quarterly trend warrants attention.

Leverage of 1.06x EBITDA LTM is moderate, but the expensive stock leaves no cushion

Net debt as of 30 September 2026 stood at $11,911 million. The ratio of net debt to trailing-twelve-month EBITDA is 1.06. That is a moderate level for an industrial company with stable cash flow.

Quarterly interest expense was $231 million. With LTM EBITDA of $11,233 million, interest coverage remains comfortable. Leverage is not a constraint on the business, but it is not a driver of equity value either.

More important for the shareholder: with a market capitalisation of $349,366 million and EV/EBITDA of 31.9, the stock is expensive relative to its own history. Low leverage does not offset the multiple premium.

EV/EBITDA of 31.9 versus a three-year average of 20.3 – a 57% premium to its own history

The trailing-twelve-month EV/EBITDA multiple is 31.9. The three-year average is 20.3. The current valuation is 57% above its own history: the stock trades at a substantial premium to how the market valued it over the past three years.

The LTM P/E is 38.4. Return on equity is 52.1%, reflecting high business profitability, but even that does not justify such a premium to the historical multiple.

The premium means the market has already priced in strong growth in profit and cash flow. Any slowdown – like the current deceleration in revenue growth from 21.1% to 15.9% – could compress the multiple. For a new buyer there is almost no margin of safety.

The portal model implies +7% upside – fairly valued, but with no margin of safety

On the portal model, which compares EBITDA growth at a target multiple with market capitalisation, the upside to fair value is +7%. This is our own calculation, not a market consensus.

The model's fair value is close to the current price, consistent with a neutral view. However, the EV/EBITDA multiple of 31.9 versus the three-year average of 20.3 shows the market values the stock at a 57% premium. The model and the multiple diverge: the model accounts for profit growth, while the market has already paid for it.

For this stock the multiple is decisive: a 57% premium to its own history leaves no cushion if growth slows. The model's +7% upside is too small to offset the risk of multiple compression.

Valuation on the latest reported figures

Bottom line

The report's strength is orders: $19.0 billion, up 49%, with the backlog more than double quarterly revenue. But revenue added only 15.9% with deceleration from 21.1%, the EBITDA margin narrowed from 22.4% to 21.5%, and net profit rose 6.1% on one-off support. Free cash flow fell 14% to $2.0 billion. The key question for a holder is valuation: EV/EBITDA of 31.9 versus a three-year average of 20.3, a 57% premium that leaves no cushion. Our conclusion: rather unattractive – the multiple is 57% above its own history, and the portal model's upside is only +7%. Our view: the share is rather unattractive at the current price; upside on the portal model +7%.