GE Vernova (GEV) 25Q3 Update

GE Vernova (GEV) posted 25Q3 revenues of $10.0 billion, up 11.8% YOY.   Operating income swung from a loss of $359 million to a profit of $366 million, primarily due to a $300 million favorable swing at Wind, and improvements of $200 million at Electrification and $100 million at Power.  On a consolidated basis, equipment gross margin surged by 820 bp.  The SG&A expense ratio declined by 160 bp.  Other income jumped from $71 million to $221 million, due to increases in earnings on equity method investments and a $73 million gain on the partial sale of its stake in China XD Electric Co., Ltd.  Net earnings attributable to GEV were $452 million or $1.64 per diluted share, reversing 24Q3’s loss of $96 million or $0.35 per share.  Adjusted (non-GAAP) earnings, which are not defined by GEV, increased from 24Q3’s $0.07 to $1.29, according to my estimates.  Yet, this was below my estimates of $2.45 for GAAP EPS and $2.23 for non-GAAP EPS and also below the consensus estimate (non-GAAP) of $1.74.

The company agreed to acquire the remaining 50% stake in its Prolec GE joint venture for $5.275 billion.  It intends to finance half of the purchase price by issuing debt and the remainder with cash on hand.  Prolec GE produces transformers for North American utilities, industrial companies and data centers.  Management believes that the acquisition will strengthen GEV’s ability to package and market its offerings to its customers, by eliminating certain contractual restrictions, and reduce operate costs over time.  Prolec GE is projected to generate $3 billion in revenues in 2025 at an adjusted EBITDA margin of 25%.  GEV sees revenues growing to $4.2 billion, or at a 10% CAGR, and incremental adjusted EBITDA rising from $0.5 billion in 2025 to $0.8 billion in 2028.  The acquisition is expected to close by mid-2026.

Management has left its full year 2025 guidance unchanged,  It anticipates $36-$37 billion in revenue, adjusted EBITDA margin of 8%-9% and free cash flow of $3.0-$3.5 billion.  That includes estimated tariffs at the lower end of $300-$400 million, net of mitigation actions.  My 2025 projections, which are in line with management’s guidance, now show 2025 GAAP diluted EPS of $7.39, down from $8.70 previously.  For 2026, I am now projecting GAAP EPS of $11.60, up from $11.00.  My updated 2026 projections include the acquisition of Prolec GE and the sale of its Proficy manufacturing software business for $600 million.

Since my last report on July 24, GE Vernova’s stock is flat, behind the S&P 500’s 7.8% gain.  The stock underperformed the broader market from August to early November, but it has slightly outperformed since then.  Its recent surge from its November 21 low looks like too much too fast, which suggests that this is an end of the year bounce.  The problem remains valuation:  The stock is currently valued at 85 times projected 2025 GAAP earnings and 54 times projected 2026 GAAP earnings of $11.60.  At the current price of $629.11, the stock has a potential negative total return of 44% to my price target of $350.  Accordingly, I am maintaining my performance rating at “5” (Sell).  The company is hosting an investor day on Dec. 9, so I will revisit my projections, price target and performance rating at that time.

This is a summary of my recent update report on GE Vernova, Inc. (GEV). To obtain a copy of the report, please reach out to me using the contact information provided below.

December 9, 2025 (Report published on December 4, 2025.)

Stephen P. Percoco
Lark Research
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