GE Vernova Earnings: Robust Gas Power and Grid Equipment Orders Partially Offset by Wind Challenges

Key Morningstar Metrics for GE Vernova

• Fair Value Estimate: $148.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of GE Vernova’s Earnings

GE Vernova GEV saw strong order trends in the gas power and electrification segments offset by weak orders and recent negative headlines in its wind business. We plan to incorporate the results into our model in the coming days, but at first glance, we expect to increase our fair value estimate of $148 per share by a mid-single-digit percentage. We view shares as fairly valued.

In conjunction with the results, GE Vernova modestly raised 2024 full-year guidance across revenue, adjusted EBITDA margin, and free cash flow. The company increased segment-adjusted EBITDA margins for its power segment, which is now expected to increase by 150-200 basis points year on year versus 100 basis points previously. Additionally, the robust demand backdrop in its electrification segment increased revenue growth to the mid-to-high-teens year on year (compared with the low double digits previously), and also increased segment margin guidance.

Order trends were positive across gas power and electrification but continue to be subdued in wind. Signs continue to point to a resurgence in gas power turbines, with new equipment orders up 70% year on year in the first half. In June, we increased our fair value estimate specifically because of higher gas power order expectations, and we continue to watch for potential orders associated with data center customers. Electrification is experiencing the strongest supply/demand environment within GE Vernova’s portfolio, with new orders ($4.8 billion) significantly outpacing revenue ($1.8 billion) in the quarter. Demand from the United States and Europe is expected to result in multiyear double-digit top-line growth with increasing margins.