GE Vernova Stock To $492?
GE Vernova (GEV) stock has jumped 12% during the past week, and is currently trading at $704.20. Our multi-factor assessment suggests that it may be time to sell GEV stock. We have, overall, a pessimistic view of the stock, and a price of $492 may not be out of reach. We believe there is a near-equal mix of good and bad in GEV stock given its overall Moderate operating performance and financial condition. But keeping in mind its Very High valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very High |
| What you get: | |
| Growth | Moderate |
| Profitability | Very Weak |
| Financial Stability | Very Strong |
| Downturn Resilience | N/A |
| Operating Performance | Moderate |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $192 Bil in market cap, GE Vernova provides electricity generation through hydro, gas, nuclear, steam, and wind, alongside grid solutions, power conversion, solar, and storage services across three segments.
[1] Valuation Looks Very High
| GEV | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 4.4 | 3.2 |
| Price-to-Earnings Ratio | 98.0 | 23.5 |
| Price-to-Free Cash Flow Ratio | 67.5 | 20.9 |
This table highlights how GEV is valued vs broader market. For more details see: GEV Valuation Ratios
[2] Growth Is Moderate
- GE Vernova has seen its top line grow at an average rate of 9.4% over the last 3 years
- Its revenues have grown 9.4% from $34 Bil to $38 Bil in the last 12 months
- Also, its quarterly revenues grew 11.8% to $10.0 Bil in the most recent quarter from $8.9 Bil a year ago.
| GEV | S&P 500 | |
|---|---|---|
| 3-Year Average | 9.4% | 5.5% |
| Latest Twelve Months* | 9.4% | 6.0% |
| Most Recent Quarter (YoY)* | 11.8% | 7.3% |
This table highlights how GEV is growing vs broader market. For more details see: GEV Revenue Comparison
[3] Profitability Appears Very Weak
- GEV last 12 month operating income was $1.4 Bil representing operating margin of 3.7%
- With cash flow margin of 9.1%, it generated nearly $3.4 Bil in operating cash flow over this period
- For the same period, GEV generated nearly $1.7 Bil in net income, suggesting net margin of about 4.5%
| GEV | S&P 500 | |
|---|---|---|
| Current Operating Margin | 3.7% | 18.8% |
| Current OCF Margin | 9.1% | 20.4% |
| Current Net Income Margin | 4.5% | 13.1% |
This table highlights how GEV profitability vs broader market. For more details see: GEV Operating Income Comparison
[4] Financial Stability Looks Very Strong
- GEV Debt was $0.0 at the end of the most recent quarter, while its current Market Cap is $192 Bil. This implies Debt-to-Equity Ratio of 0.0%
- GEV Cash (including cash equivalents) makes up $7.9 Bil of $54 Bil in total Assets. This yields a Cash-to-Assets Ratio of 14.6%
| GEV | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 0.0% | 20.4% |
| Current Cash-to-Assets Ratio | 14.6% | 7.0% |
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