Shares of GE Aerospace (NYSE: GE) have been strong following the former conglomerate's split into three publicly traded companies in April. However, its shares pulled back following its third-quarter results despite solid orders and an upbeat outlook.

Let's take a close look at the aerospace company's most recent results to see if this pullback is a buying opportunity.

Strong orders, but supply chain issues

One of the driving products for GE Aerospace is its LEAP engine, which has seen strong demand. However, investors were disappointed after the company's LEAP engines deliveries fell 6% in the quarter. Meanwhile, GE said that LEAP engine deliveries this year would likely decline after a prior view that they would grow moderately.

Demand isn't the issue: Overall orders increased 28% to $12.6 billion. However, component shortages have led to the company struggling to keep up with demand. GE expects good growth in LEAP engine output next year, helped by supply chain improvements and the certification of a new HPT blade, which should improve manufacturing efficiency.

For the third quarter, GE's adjusted revenue rose 6% to $8.9 billion, which came up just short of the $9 billion analyst consensus. Adjusted earnings per share (EPS) rose 25% to $1.15, topping analyst expectations by $0.01.

Revenue for the company's commercial engines and services segment rose 8% to $7 billion, while orders climbed 29%. Service revenue in the segment rose 10%. Defense and propulsion technologies, meanwhile, saw revenue edge up 2% to $2.2 billion, with orders up 19%.

Profit margins were strong, increasing 180 basis points due to higher services, volume, and price.

GE generated strong cash flow in the quarter, with operating cash flow of $1.9 billion and free cash flow of $1.8 billion.

GE lifted its full-year outlook for a few metrics. It still expects to grow revenue by high single digits, but it is now looking for adjusted EPS to come in between $4.20 and $4.35, up from prior guidance of $3.95 to $4.20. It now expects free cash flow of between $5.6 billion and $5.8 billion, up from a previous outlook of $5.3 billion to $5.6 billion.

Data source: GE Aerospace.

For 2025, GE Aerospace said it is expecting meaningful profit and cash-flow growth.

Is it time to buy the dip?

GE Aerospace by and large utilizes a razor-and-blades model. While the company is currently making a lot of money selling jet engines that are now in short supply due to component shortages, its main profit source would typically be servicing these engines later down the line. As such, fewer engine deliveries ultimately leads to less profits, as it means fewer engines out in the field to service.

However, the supply shortage has also kept more older engines in the field for longer, leading to strong service growth, while a shortage of jet engines has led to better margins. So in many regards, this is a very good environment for the company.

Meanwhile, demand for its engines is there, and the company had a couple of noteworthy wins for its engines in the quarter with EVA Air and Qatar Airways on the commercial side. On the defense side, it received engine orders from the Polish Ministry of National Defense.

From a valuation perspective, the company trades at a pretty hefty multiple, with a forward P/E of under 34 times 2025 analyst estimates.

The current environment remains a good one for jet engine makers, so I would expect the company to continue to produce solid results. However, the valuation remains a bit pricey even after the price dip.

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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

GE Aerospace Shares Fall Despite Upbeat Outlook. Is It Time to Buy the Stock on the Dip? was originally published by The Motley Fool