Bull & Bear

Figures converted from EUR at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged.

Bull and Bear

Verdict: Lean Long, Wait For Confirmation — the CFM franchise is real and the 2050 renewal is locked, but FY25 cash flow carries roughly $1.18B of working-capital timing that the bear correctly flags as the one undisputed forensic question in this report. Bull's structural case (45,000-engine type-certificate annuity, 23.0% Propulsion margin, 14-turn EV/EBITDA discount to GE) is the stronger long-duration argument; Bear's near-term cash-quality flag is the stronger near-term argument. Both sides converge on the same evidence event — the H1-2026 receivables and DSO disclosure expected late July 2026 — which makes "wait for the print" an institutionally honest answer rather than a hedge. The tension that decides it is whether the $1.18B FY25 working-capital tailwind reverses cleanly as timing on French state customers (Bull) or unwinds as the front half of a normalized FCF reset (Bear). Until that prints, the long is justifiable on the franchise but not yet on the cash conversion the 20.3× multiple is buying.

Bull Case

The three points retained from Bull, ranked by structural weight. The fourth — the Pratt GTF storage tailwind — was dropped as a cyclical share-shift argument that Bear's symmetric "GTF recall ends 2026-27" point neutralizes.

Bull's target is $460 per share on 18× 2026 adjusted EBITDA (~$8.81B implied) against management's reaffirmed $7.16-7.28B recurring operating income, closing roughly half the 14-turn EV/EBITDA gap to GE. Timeline 12-18 months, primary evidence window the H1-2026 print in late July 2026 followed by FY2026 results in February 2027. Disconfirming signal: FY26 FCF below $4.94B with the receivables gap unwound AND Propulsion margin slipping below 21% — that combination breaks the compounding thesis and forces the long off.

Bear Case

The three points retained from Bear, ranked by sharpness. The fourth — the GTF recall ending 2026-27 and CFM share reverting to Pratt — was dropped as the symmetric pair to Bull's transient GTF tailwind; both sides accept the share dynamic but neither has the better forward visibility on it.

Bear's downside target is $274 on 13× EV/adjusted EBITDA — the peer-median ex-GE (MTU 12.4×, Thales 15.4×, Honeywell 17.1×, RR 18.0×) — against a 2026 EBITDA that consensus revises down ~5% when the WC tailwind unwinds. Net cash $2.0B credit, 417.9M shares. Timeline 12-18 months. Primary trigger: H1-2026 receivables and contract-asset disclosure (late July 2026); if DSO does not retrace below 145 days, the FY26 FCF guide comes off-table. Cover signal: clean H1-2026 receivables reversal (DSO under 145, supplier-finance disclosed under $590M) AND formal Pentagon clearance of AVIC review without procurement restriction AND Airbus/Boeing architecture commitment to CFM RISE.

The Real Debate

Three tensions where Bull and Bear interpret the same fact differently. Each row anchors on a specific figure or filing item rather than a directional opinion.

Verdict

Lean Long, Wait For Confirmation. Bull carries more weight on the durable variables — the 2050 CFM renewal is a regulator-enforced annuity, the Propulsion 23.0% recurring margin and +21.6% civil aftermarket print are converting that annuity to cash, and the 14-turn gap to GE is real even after discounting GE as a clean-reporting outlier. The single most important tension is whether the $1.18B of FY25 working-capital tailwind reverses as timing on French state customers or unwinds as a normalization of cash conversion, because that is the one piece of evidence on which both sides agree the same near-term print decides the question. Bear could still be right if H1-26 receivables fail to retrace below ~145 DSO and the FY26 $5.17-5.40B FCF guide comes off-table — in that world the 20.3× multiple is exposed to peer-median gravity at ~13× and the structural cost drags (surtax, FX, AVIC) compound the de-rate. The condition that confirms the long is a clean H1-2026 receivables reversal with Propulsion margin holding at or above 23%; the condition that flips it to "Avoid" is the bear's specified trigger landing — DSO failing to retrace with the supplier-finance footnote disclosing a material balance — at which point the cash-quality argument the 20× multiple is buying breaks. The durable thesis breaker is the cash-conversion ratio of the aftermarket annuity over a full cycle, not any single print; the near-term evidence marker is the late-July 2026 H1 disclosure. Do not take size on the long ahead of the print.