GE Vernova (GEV) 25Q2 Update

GE Vernova (GEV) posted 25Q2 revenues of $9.1 billion, up 21.9% YOY.   Yet, operating income fell 47.4% from $527 million to $378 million, primarily due to the nonrecurrence of $306 million related to an arbitration refund received in 24Q2.  Similarly, other income declined from $881 million to $115, mostly due to the nonrecurrence of a pre-tax gain on the sale of a portion of the Steam Power nuclear activities to EDF.  Thus, net earnings attributable to GEV were $514 million or $1.86 per diluted share, down from 24Q2’s $1.29 billion or $4.69 per share.  Adjusted (non-GAAP) earnings, which are not defined by the company, were $1.76, according to my estimates, up from a loss in 24Q2 of $0.34.  The consensus estimate (non-GAAP) was $1.50.

Power segment revenues were $4.8 billion, up 6.8% YOY, and up 9.4% organically.  Unit sales rose from 15 to 21, with eight 5 H-class turbines delivered in the quarter, up from one a year ago.  Orders jumped 44% to $7.1 billion.  Power EBITDA rose 26.9% to $778 million, with EBITDA margin up 250 bp to 16.3%.  Wind revenues rose 8.9% to $2.25 billion.  Wind orders, however, declined 4.5% to $2.06 billion, due to lower Onshore orders outside of North America.  Wind’s negative EBITDA widened from a loss of $117 million to a loss of $165 million.  Electrification revenues rose 23.0% to $2.20 billion.  Orders fell 31% to $3.34 billion due to the non-repeat of two large billion dollar plus orders.  Electrification EBITDA more than doubled from $129 million to $322 million, as EBITDA margin surged 740 bp to 14.6%.

Management raised its free cash flow guidance from $2.0-$2.5 billion to $3.0-$3.5 billion, guided to the high end of its $36-$37 billion revenue guidance and clarified its adjusted EBITDA margin to a range of 8%-9%, where it had previously said a high single-digit increase.  Tariffs had little impact in the quarter, but management still sees potential headwinds toward the lower end of $300-$400 million before mitigation actions.  I have raised my projections, which now show 2025 GAAP diluted EPS of $8.70, up from $6.93 previously, and 2026 GAAP EPS of $11.00, up from $9.24.  My updated projections are in line with consensus views.

Since my last report on April 23, GE Vernova’s stock has surged 87.2%, trouncing the S&P 500’s 18.7% total return.  From a technical point of view, the stock is overbought and its valuation at 72.3 times projected 2025 GAAP EPS and 57.2 times projected 2026 GAAP EPS is in the stratosphere.  Based upon the company’s performance, I have raised my price target from $300 to $350.  The new target equates to 31.8 times projected 2026 GAAP earnings of $11.00, half the current one-year forward multiple of 72.3 times.  At the current price of $629.03, that equates to a potential negative total return of 44%, so I have lowered my performance rating from “4” (Underperform) to “5” (Sell).  I have been slow in recognizing the improvement that the company has shown in its financial performance, which has prompted me to raise my projections and price targets belatedly to keep up, but the stock has surged well ahead of those reported improvements, going from very expensive to what now seems outlandish.

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.

July 24, 2025 (Report published on July 24, 2025.)

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com

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