GE Vernova’s 25.3% return over the past six months has outpaced the S&P 500 by 14.2%, and its stock price has climbed to $990.50 per share. This performance may have investors wondering how to approach the situation.
Following the strength, is GEV a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive on GEV?
Born from the energy business of industrial giant General Electric in a 2023 spin-off, GE Vernova (NYSE: GEV) designs, manufactures, and services power generation equipment and grid technologies to help customers build more reliable and sustainable electric systems.
1. Skyrocketing Revenue Shows Strong Momentum
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. GE Vernova’s annualized revenue growth of 10.7% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
2. EPS Surges Higher Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
GE Vernova’s EPS grew at an astounding 169% compounded annual growth rate over the last two years, higher than its 10.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, GE Vernova’s margin expanded by 45.3 percentage points over the last four years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. GE Vernova’s free cash flow margin for the trailing 12 months was 30.1%.
Final Judgment
These are just a few reasons GE Vernova is a high-quality business worth owning, and with its shares topping the market in recent months, the stock trades at 47× forward P/E (or $990.50 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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