GE Aerospace vs. Textron: Which Aerospace & Defense Stock Has Greater Upside?

GE Aerospace GE and Textron Inc. TXT are two prominent names operating in the aerospace and defense industry. As rivals, both companies are engaged in producing highly engineered aircraft components for commercial and military aircraft in the United States and international markets.

These companies have been enjoying significant growth opportunities in the aerospace and defense space on account of the improving air traffic trend and the expansionary U.S. defense budgetary policy in the past couple of years. Let's take a closer look at their fundamentals, growth prospects and challenges.

The Case for GE Aerospace

GE Aerospace is poised to gain from its growing installed base and higher utilization of engine platforms, supported by strength across commercial & defense sectors. Solid demand for LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is proving beneficial for the Commercial Engines & Services business. In first-quarter 2026, the company received orders for more than 650 commercial engines, including commitments from American Airlines, United Airlines and Delta Airlines.

Growing popularity for the company's propulsion & additive technologies, critical aircraft systems and aftermarket services in the defense sector is driving the Defense & Propulsion Technologies business' performance. In the first quarter, GE clinched a $1.4 billion deal for T408 engines to support the U.S. Marine Corps' CH-53K helicopter fleet.

GE remains committed to making investments to boost growth and provide better services to its customers. The company has been on track to invest more than $1 billion in its MRO facilities around the world over the next five years. For 2026, the company had announced its plan to invest an additional $1 billion in U.S. manufacturing and technology. Also, in the same period, GE Aerospace plans to invest more than €110 million across its European manufacturing facilities.

The company's shareholder-friendly policies also add to its appeal. In first-quarter 2026, it paid dividends of $381 million, up 26.2% year over year, to its shareholders. It also raised its dividend by 30.6% to 36 cents per share in February 2026. In the same period, the company repurchased shares for $2.2 billion.

Despite the positives, GE's highly leveraged balance sheet remains concerning. Exiting the first quarter, GE Aerospace's total borrowings were $20.3 billion. The figure comprised $2.1 billion of short-term borrowings and $18.2 billion of long-term borrowings.

Story Continues

The Case for Textron

Growth in commercial air passenger traffic has been benefiting Textron's Aviation business unit. In first-quarter 2026, Textron Aviation revenues increased 22% year over year, driven by higher aircraft revenues and an increase in aftermarket parts and services revenues. Exiting the first quarter, the Aviation business' backlog rose to $8.0 billion from $7.7 billion at year-end 2025, supporting delivery and aftermarket plans across product lines.

Besides its strong presence in the commercial aerospace market, Textron enjoys solid demand for its defense products as well. In the first quarter, Bell's military revenues increased 9% year over year, driven by continued growth on the MV-75 Cheyenne program. Textron Systems' revenues increased 13% largely due to higher volume on the Ship-to-Shore Connector program and military training services at ATAC.

TXT continues to invest in product upgrades, certifications and feature enhancements across its portfolio to defend share and support pricing and mix. Recent activity includes the certification of the Citation Ascend and ongoing development programs such as the Beechcraft Denali, alongside continued enhancements to in-production models.

The company's cash and cash equivalents amounted to $1.51 billion at the end of the first quarter. While Textron's long-term debt totaled $3.11 billion exiting the quarter, its current debt was $0.36 billion. Although the long-term debt value exceeds its cash reserve, its current debt remains much lower than the cash balance. So, it seems that the company boasts a solid solvency position, at least in the short term.

However, the persistence of supply-chain issues arising out of component shortages and delays might result in production delays for some of Textron's products. Management continues to cite engines as a key constraint area, even as broader systemic issues have moderated compared with prior years.

Price PerformanceZacks Investment Research

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In the past six months, GE Aerospace shares have risen 21.1%, while Textron stock has gained 3.5%.

The Zacks Consensus Estimate for GE & Textron

The Zacks Consensus Estimate for GE's 2026 sales and earnings per share (EPS) implies year-over-year growth of 15.2% and 17.4%, respectively. EPS estimates for both 2026 and 2027 have increased over the past 60 days.Zacks Investment Research

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The Zacks Consensus Estimate for Textron's 2026 sales and EPS implies year-over-year growth of 5.2% and 8.2%, respectively. Although the EPS estimates for 2026 have increased over the past 60 days, the same for 2027 have declined.Zacks Investment Research

Image Source: Zacks Investment Research

Valuation of GE & TextronZacks Investment Research

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Textron is trading at a forward 12-month price-to-earnings ratio of 12.95X, close to its median of 13.12X over the last three years. GE's forward earnings multiple sits at 46.32X, higher than its median of 36.73X over the same time frame.

Final Take

GE Aerospace's strong momentum in the commercial and defense aerospace markets, driven by solid build rates, wide-body aircraft demand and a robust defense budget, bodes well for growth. Given the strength across most of its served markets, GE has built a sound liquidity position that supports its shareholder-friendly policies.

In contrast, Textron's strength in commercial and defense aerospace markets, along with its robust pipeline of projects, favors well for its growth. Its strong liquidity position is an added strength. However, this has been marred by the supply-chain challenges arising from component shortages, which might affect its near-term performance.

Despite its steeper valuation, GE holds robust prospects due to strong estimates, stock price appreciation and better prospects for sales and profit growth. Given these factors, GE seems a better pick for investors than Textron currently. While GE carries a Zacks Rank #2 (Buy), Textron currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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