Hello everyone š
I'd like to share my thoughts on two companies I recently wrote analyses about here on Bulios.
I hold GE Aerospace $GE in my portfolio and the latest results didn't disappoint. Revenue grew by 24% and the company raised its full-year guidance. Operating margin did fall to 21.7%, a 130 basis point drop year-over-year, but management attributes this to the ramp-up of new engines and LEAP servicing, which are inherently temporary items.
What I like about GE in the long term isn't the single-quarter numbers. The company now makes most of its money not from selling engines, but from servicing them and providing spare parts, where margins are significantly higher and where it holds an almost oligopolistic position. An engine is sold once, but gets repaired for the next thirty years. Spare parts revenue grew over 25%.
I don't own Ryanair $RYAAY in my portfolio, but I honestly enjoy it as a business. The last quarter looks weak, with profit falling 34% to 538 million euros, but this is mainly due to a jump in fuel prices for the 20% of volume the company hadn't hedged, and lower average fares. I break this down in detail in my analysis. But what matters much more to me is that the company has been debt-free since May and holds net cash of 2.7 billion euros. Such a strong balance sheet is quite an exception in an industry where airlines are usually drowning in liabilities. On top of that, Ryanair has margins the rest of the market can't match, and a management team that maintains cost discipline even in tougher years.
How do you see it? Is aviation an investable sector for you?
