GE Vernova (GEV) 26Q2 Results

GE Vernova (GEV) posted 26Q2 revenues of $11.1 billion, up 21.9% YOY.   Operating income surged 72.8% to $655 million, driven by revenue growth and higher margins at Power and Electrification, which more than offset a modestly wider loss at Wind.  On a consolidated basis, equipment gross margin increased by 20 bp to 33.1% YOY; while services gross margin jumped 370 bp to 32.6%.  The SG&A expense ratio declined by 60 bp to 12.1%.  Net earnings attributable to GEV were $2.47 per diluted share, up from $1.86 in 25Q2.  Adjusted (non-GAAP) earnings, which are not defined by GEV, increased from $1.75 to $2.34, according to my estimates.  Yet, expectations were high as GAAP per share earnings of $2.47 were below the consensus estimate of $3.18, according to Yahoo! Finance.  Free cash flow was $5.1 billion, up from $4.8 billion in 26Q1 and $0.2 billion in 25Q2, as the company took in $8.1 billion (and $13.7 billion YTD) from downpayments on orders and slot reservation agreements (SRAs).

In 26Q1, the company closed the acquisition of the remaining 50% stake in the Prolec GE joint venture for $5.254 billion.  It financed half of the purchase price by issuing $2.8 billion of debt and the remainder with cash.  In conjunction with the acquisition, it wrote its own 50% stake in Prolec GE up to fair value, booking a (non-cash) gain of $4.4 billion, all of which was recorded as goodwill.

With the 26Q2 results, management raised its full year 2026 guidance.  It now anticipates $45.5-$46.5 billion in revenue, up $1 billion; adjusted EBITDA margin of 12%-14%, which is unchanged; and free cash flow of $11.5-$13.5 billion, up from $6.5-$7.5 billion.  It now sees higher revenues at Power and Electrification and a low double-digit revenue decline at Wind.  Still, its guidance implies that Wind will have positive EBITDA in 26H2, reversing 26H1 losses.  My projections are in line with guidance, resulting in projected diluted GAAP EPS of $29.61 and estimated non-GAAP EPS of $14.53.  For 2027, I now project revenues of $54.5 billion, up 18.6%, GAAP EPS of $21.50 and non-GAAP EPS of $21.21.

YTD, GE Vernova’s stock has delivered a total return of 54.3%, handily outperforming the S&P 500’s 11.8% gain.  However, the stock is down 12.4% since late April, underperforming the S&P 500’s 6.4% advance.  Still, GEV has performed far better than I have anticipated, as I have maintained my sell rating throughout the year.

Nevertheless, with the stock valued at 47.0 times 2027 GAAP EPS and 47.7 times non-GAAP EPS, my key concern remains valuation.  Management anticipates accelerating multiyear growth based upon strong orders and slot reservation agreements.  Yet, the valuation already prices in most, if not all, of this growth, leaving little room for setbacks in my view.  While valuation is in the eye of Mr. Market and it is possible to posit scenarios that would support the valuation over the long term, I believe that downside economic risks and technological adaptations, which would reduce potential demand from data centers, are being largely ignored by the market.

My 12-month price target for GEV is $900 which equates to 41.9 times projected 2027 GAAP EPS of $21.50 and 43.6 times projected non-GAAP EPS of $20.65.  I anticipate that the stock’s forward multiple will decrease toward the market averages over time as growth peaks.  At yesterday’s closing price of $1010.99, my price target anticipates a negative total return of 10.8%, including the stock’s 0.2% dividend yield.  I maintain my performance rating at “5” (Sell).  While I do not recommend shorting the stock, I believe that the downside risks outweigh the upside potential from here, but it is difficult to determine when those downside risks might materialize.

This is a summary of me recent report on GE Vernoca, Inc. (GEV). For a limited time, I am offering access to my reports at no cost. You can obtain a copy of the report here.

August 4, 2026 (Report published on August 4, 2026.)

Stephen P. Percoco
Lark Research
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© 2015-2026 by Stephen P. Percoco, Lark Research.   All rights reserved.

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