GE Vernova-Powered Gas Plant Starts Operation: Time to Buy the Stock?

GE Vernova Inc. GEV recently announced that the Guangming gas plant, located in the Guangdong province of China and powered by three GE Vernova 9HA.01 gas turbines, has begun operations. This power plant will supply up to 2 gigawatts (GWs) of lower-carbon electricity. As the Chinese government expedites the nation’s coal-to-gas energy transition, GE Vernova looks poised to gain immensely as it has been operating in China for more than 40 years now. GEV’s prowess in China can be further gauged from the fact that its Gas Power unit serves more than 110 customers and more than 240 gas turbines in China, with an installed power capacity of 50 GWs. Against the aforementioned backdrop, the latest Guangming gas plant announcement might encourage energy investors to add GEV to their portfolio. However, before making any hasty decision, let’s delve into the company’s performance over the past year, growth prospects as well as risks (if any). This way an investor can make a prudent and informed decision. GEV Stock Outperforms Industry, Sector & S&P 500Shares of GE Vernova have surged an impressive 162.2% in the past year, outperforming the Zacks Alternative-Energy industry’s growth of 76% and the broader Zacks Oils-Energy sector’s return of 7.6%. It has also outpaced the S&P 500’s surge of 23%.A similar stellar performance has been delivered by other industry players, such as Talen Energy Corporation TLN, Constellation Energy Corporation CEG and Bloom Energy BE, whose shares have surged 229.4%, 147.3% and 80.9%, respectively, in the past year.GEV 1-YR PerformanceImage Source: Zacks Investment ResearchWhat’s Pushing GEV Stock Up?The global shift toward clean energy solutions continues to be a key growth catalyst for GEV, a renowned renewable energy equipment and services provider. Impressively, the company comes with an installed base of approximately 54,000 onshore wind turbines worldwide. It also enjoys prowess in the offshore wind energy platform, with a portfolio of offshore wind turbines ranging from 6 MW megawatt (MW) to 14 MW.  In January 2025, GE Vernova’s Onshore Wind business announced that it signed an order to provide 14 4.2MW-117m turbines for the Iwaya and Shitsukari wind farms of Japan. In the same month, GE Vernova revealed a $20 million investment plan to enhance next-generation repair capabilities and technologies for High Efficiency, Air-Cooled (HA) gas turbines at its Advanced Manufacturing Repair Technology Center in Singapore. These announcements show the continuing efforts of GE Vernova to expand its footprint in the clean energy industry as a major provider of sustainable energy. This must have boosted investors’ confidence in this stock, which in turn got reflected in the aforementioned share price hike.Will GEV Stock Continue its Growth?Global electricity demand is expected to rise at a faster rate over the next three years — an average of 3.4% annually through 2026 (as per the latest report published by the International Energy Agency). Such impressive growth projection should bode well for GE Vernova’s grid solution equipment and services in the long run. Notably, in December 2024, GE Vernova announced that it has been chosen by Korea Electric Power Corporation (KEPCO) to deliver its advanced High Voltage Direct Current (HVDC) system for the 500 kilovolts (kV) Donghaean #2 to Dong-Seoul HVDC converter station project (EP2). This project, intended to be the largest power grid infrastructure initiative in South Korea’s history, should further enhance GEV’s prowess in the renewable electric generation industry and thereby boost its operating results.In line with this, the Zacks Consensus Estimate for GEV’s long-term (three-to-five years) earnings growth is pegged at a solid 18%. Let’s take a quick look at its near-term estimates to get a clearer picture.Estimates for GEVThe Zacks Consensus Estimate for 2024 and 2025 sales implies an improvement of 5.5% and 5.2%, respectively, year over year. However, the Zacks Consensus Estimate for 2024 earnings per share has moved south by 19% over the past 60 days. The downward revision in earnings estimates indicates analysts’ declining confidence in the stock.Image Source: Zacks Investment ResearchImage Source: Zacks Investment ResearchRisks to Consider Before Choosing GEVDespite the aforementioned growth opportunities, GEV faces certain challenges that one should consider before investing in this stock.  To this end, it is imperative to mention that the offshore wind industry has been facing increased challenges lately in the form of increased material costs and persistent supply-chain challenges. This, in turn, has led to several project cancellations in recent times. As a manufacturer of wind turbines, GEV has been experiencing pressure in its Offshore Wind business related to its product and project costs. Changes in execution timelines or other adverse developments might have an impact on GEV’s cash collection timelines and contract profitability, resulting in losses beyond current expectations.Moreover, given the long-cycle nature of its power generation business, the company expects the impact of inflation to continue to be challenging for its business, which, in turn, might hurt the pricing of its products and services.GEV Stock Trading at a PremiumIn terms of valuation, GEV’s forward 12-month price-to-earnings (P/E) is 54.16X, a premium to its peer group’s average of 13.63X. This suggests that investors will be paying a higher price than the company's expected earnings growth compared to its peers.Image Source: Zacks Investment ResearchFinal ThoughtsTo conclude, investors interested in GEV Vernova should wait for a better entry point, considering its premium valuation, downward revision in annual earnings estimate and the challenges it is facing in the wind market. Also, GEV currently has a VGM Score of F, which is not a favorable indicator of a strong performance. However, those who have already invested in this Zacks Rank #3 (Hold) company may continue to do so as its upbeat sales estimates, solid share price returns over the past year, as well as benefits of steadily growing renewable penetration in the electricity generation industry offer solid prospects.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Constellation Energy Corporation (CEG): Free Stock Analysis Report Talen Energy Corporation (TLN): Free Stock Analysis Report Bloom Energy Corporation (BE): Free Stock Analysis Report GE Vernova Inc. (GEV): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks