Chicago, IL – January 22, 2025 – Today, Zacks Investment Ideas feature highlights GE Vernova GEV and Constellation Energy CEG.
Is This NVIDIA-Beating Stock a Must-Buy Ahead of Earnings?
Energy transition and the nuclear energy standout GE Vernova has skyrocketed 190% since its April 2024 IPO.
GE Vernova jumped to fresh all-time highs on Friday heading into its Q4 earnings release on Wednesday, January 22.
See the Zacks Earnings Calendarto stay ahead of market-making news.
Wall Street flocked to the GE spinoff for its impressive earnings growth and ability to expand alongside key megatrends. GE Vernova provides investors the chance to add exposure to nuclear energy, electrification, natural gas, the artificial intelligence boom, and broader infrastructure spending.
The Bull Case for This Energy Stock
GE Vernova is a pure-play energy transition company growing alongside electrification, nuclear energy expansion, natural gas, and beyond. GEV boasts that its customers generate roughly 25% of all the electricity in the world via GE Vernova’s installed base of technologies.
GE Vernova reports via three business segments: Power, Wind, and Electrification. GEV’s steam power unit has provided nuclear turbine technologies and services for all reactor types for decades. GEV’s Hitachi Nuclear Energy division is a leading provider of advanced nuclear reactors, fuel, and nuclear services.
The U.S. aims to triple nuclear energy capacity by 2050 as it attempts to wean itself off fossil fuels. Microsoft, Amazon, and other technology titans made nuclear energy deals in 2024 to secure reliable power to fuel the AI arms race.
GE Vernova is at the forefront of next-generation small modular nuclear reactor (SMR) technologies. The U.S. Department of Energy selected GE Vernova to help build out a key part of the next-gen nuclear and uranium industry.
GEV also critically provides investors long-term exposure to natural gas. Natural gas will continue to play a massive role in the U.S. and around the world as technology companies and everyone else look for reliable energy while attempting to shutter coal plants.
Nuclear energy powerhouse Constellation Energy announced on January 10 a $26.6 billion cash-and-stock deal to buy natural gas and geothermal titan Calpine.
Beyond nuclear and natural gas, GE Vernova’s growth pipeline includes electrification software, power conversion, energy storage, grid solutions, and more. GE Vernova is streamlining its operations, including its struggling offshore wind business.
Furthermore, GE Vernova boosted its bull case when it declared its first dividend on December 10, which will be payable in the first quarter of 2025. GEV approved an initial $6 billion share repurchase plan as well.
GE Vernova’s Growth Outlook
GE Vernova is projected to grow its adjusted earnings by a whopping 237% in 2025 to $6.61 a share vs. a projected $1.96 in FY24, based on Zacks estimates.
The company is projected to earn $2.32 a share in the fourth quarter. We don’t have a comparable FY23 period because GE Vernova went public in April 2024 following GE’s separation into three standalone companies.
GEV’s earnings estimates have slipped recently, but GE Vernova beat by 59% in Q3.
On the revenue front, GE Vernova is projected to grow by 5.5% in 2024 and 5% in 2025. GEV provided an updated growth outlook to Wall Street on December 10.
GEV expects its revenue will reach ~$45 billion by 2028, marking a high-single-digit compound annual growth rate through 2028 vs. the 2025 base year—compared to its prior mid-single-digit outlook. “We are executing our financial strategy, and we now expect to generate at least $14 billion in cumulative free cash flow by 2028,” GE Vernova CFO Ken Parks said in prepared remarks.
“Our large and growing backlog, with healthy margins from services and better equipment pricing, is fueling our trajectory as we raise our 2025 guidance and outlook by 2028. We remain committed to maintaining an investment grade balance sheet as we make organic investments, pursue targeted M&A, and return at least one third of cash generation to shareholders through dividends and share repurchases.”
This backdrop is why 18 of the 26 brokerage recommendations Zacks has are “Strong Buys,” with zero sells.
Great Time to Buy GEV for 2025 and Long-Term Upside?
GE Vernova was one of the best-performing S&P 500 stocks in 2024, easily outpacing Nvidia and fellow nuclear energy standout Constellation since it went public in April.
GEV has jumped 45% in the past three months, while Nvidia dropped 4% and CEG climbed 15%, driven by its 23% surge to new all-time highs to start 2025.
On the valuation front, GEV trades at a 60% discount to its peaks in terms of its price/earnings-to-growth (PEG) ratio at 3.3, highlighting its robust earnings growth outlook.
The impressive YTD performance helped GEV break out of its sideways run since its post-Trump election jump. GEV found support at its post-election levels and its 50-day moving average several times.
The stock is possibly overheated and could be due for profit taking after earnings. Any pullback to GE Vernova’s 50-day or 21-day moving averages likely offer investors a solid buying opportunities.
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