GE Vernova reported worse-than-expected third-quarter profit but reaffirmed full 2024 guidance early Wednesday as the General Electric spinoff continues to see "incremental contract losses" from its offshore wind business. GEV shares angled higher early Wednesday.
The company saw third-quarter earnings of 10 cents per share and revenue coming in at $8.9 billion. Prior to Wednesday's earnings release, analysts expected Q3 earnings of 17 cents per share with revenue totaling $8.77 billion, according to FactSet.
GE Vernova ended Q3 with $7.4 billion in cash, up from $5.8 billion at the end of Q2. The company said its sales total was due to growth in its equipment and services segment and positive pricing across all its segments. GE Vernova did see "incremental contract losses" in offshore wind. The outfit saw orders in its wind power segment decrease about 19% to $1.7 billion due to lower onshore wind equipment demand.
Wind power revenue came in flat at $2.9 billion. GEV predicted a considerable Q3 loss from its wind energy business ahead of earnings.
GE Vernova also reaffirmed 2024 revenue guidance of $34 billion-$35 billion. The company also continues to expect adjusted EBITDA margin of 5%-7% and free cash flow between $1.3 billion-$1.7 billion. In March, GE Vernova announced it is targeting 10% EBITDA by 2028. The company betting on the strong demand for grid equipment that its electrification backlog will triple to around $18 billion by the end of 2024.
Chief Financial Officer Ken Parks said in the earnings release Wednesday that GEV's decision to maintain its guidance is the "strong performance in power and electrification offsetting additional losses in wind this quarter."
Stock Performance: GE Vernova
GE Vernova edged up 0.4% to 277.40 during market trade on Wednesday. The stock closed at 276.42 on Tuesday and has gained 8.4% in October. Since booking a monthly decline in June, GEV has rallied for fourth straight months, including a nearly 27% advance in September.
The stock broke out of a seven-week base in mid-August. Shares are up more than 40% from that breakout.
Meanwhile, the 56 stocks in the IBD tracked Energy-Alternative/Other industry group have collectively gained more than 43% in 2024, according to MarketSurge.
GE Vernova emerged from General Electric's big, long-term breakup earlier this year, with spinouts of GE Aerospace and GE HealthCare Technologies. GE Aerospace kept the GE ticker symbol.
Before the spinouts, General Electric shed a number of assets and operations over a series of years, from lighting to locomotives. In November 2017, GE began signaling the breakup process amid financial troubles.
GE Vernova stock has a 93 Composite Rating out of a best-possible 99. The stock also has a 97 Relative Strength Rating and a 70 EPS Rating.
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