GE Vernova Stock Analysis: Why GEV Owners Should Take Profits Now

May 17, 202410:30 UTC

Here’s an energy company that’s old and new at the same time. I’m referring to General Electric GE spinoff company GE Vernova GGEV, which may catch the interest of investor looking for highflying stocks. However, caution is advised as GE Vernova stock moved too far, too fast.

Headquartered in Massachusetts, GE Vernova is focused on power generation and renewable energy, including wind-generated electricity. The company’s shares started trading publicly on April 2 of this year. As we’ll discover, GE Vernova’s first post-spinoff earnings report has some surprises, but they’re not positive ones.

GE Vernova Stock’s Rocket Ride

As GE Vernova’s shares started trading, Morningstar predicted that the company “will be worth nearly $35 billion on an equity value basis.” Fast-forward to May 10, and GE Vernova’s market capitalization was already up to $45.6 billion.

It’s been a rocket ride for GE Vernova stock, which started trading at $115 per share. By April 25, when GE Vernova released its first post-spinoff quarterly report, the company’s stock was already above $140.

The practically nonstop rally continued, with GE Vernova shares trading at $168 on May 10. Who would have imagined that a General Electric spinoff business would become a darling among stock traders?

This could easily be a bull trap, however. Prudent investors should consider whether GE Vernova’s actual results justify the share-price run-up. So, let’s see what the data reveals.

GE Vernova’s Wind-Unit Disappointment

For the first quarter of 2024, GE Vernova reported a net earnings loss of 41 cents per share. Thus, so far this year, it appears that GE Vernova isn’t a profitable company.

For the current quarter, Wall Street expects GE Vernova to swing to a healthy profit of 71 cents per share. That’s a tall order, and GE Vernova could be vulnerable to a sharp pullback if the company doesn’t deliver outstanding results.

GE Vernova reported that the company’s Electrification-segment orders were down 10% organically in Q1 of 2024. Even worse than that, GE Vernova’s Wind-segment orders declined 40% organically.

In addition, GE Vernova’s Wind-unit revenue fell 6%, or 7% organically. Clearly, this part of GE Vernova is dragging on the company’s overall top-line results. Is it possible that overeager investors overlooked this issue when they pumped up GE Vernova’s market cap?

GE Vernova Stock: Take Profits If You Got ‘Em

If you were fortunate enough to buy GE Vernova shares when they debuted for public trading, you’ve done well. Congratulate yourself, and take your profits before they evaporate.

While you’re at it, review GE Vernova’s financials carefully. You’ll find issues, especially with the company’s Wind division. With that in mind, it’s wise to sell GE Vernova stock if you own it, or to avoid it if you don’t own it.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.