Should You Buy GE Vernova Stock Ahead of Q3 Earnings Report?

GE Vernova Inc. GEV is slated to report third-quarter 2024 results on Oct. 23, before market open.   Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for revenues is pegged at $8.90 billion. The consensus mark for third-quarter earnings is pegged at 22 cents per share. The bottom-line estimate has plunged 74.1% in the past 60 days.Image Source: Zacks Investment ResearchEarnings of GEV, a renowned renewable energy equipment and services provider, outpaced the Zacks Consensus Estimate in the last reported quarter, delivering a surprise of 2.90%. However, in the first quarter of 2024, the bottom line missed the consensus mark by 70.8%.Image Source: Zacks Investment ResearchEarnings Whisper for GEVOur proven model does not conclusively predict an earnings beat for GEV this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.GEV has a Zacks Rank #3 and an Earnings ESP of -20.30% at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Key Factors That Might Have Influenced GEV’s Q3 PerformanceSolid order growth for GE Vernova’s gas equipment, particularly for heavy-duty gas turbbines, driven by increases in Gas Power project commissioning, must have boosted the top-line performance of its Power business segment. Also, increased orders for its Gas Power services, driven by higher outages and transactional service volume, are likely to have contributed favorably to the Power segment’s revenues in the soon-to-be-reported quarter.  As more consumers are switching to renewable sources of electricity, demand for large-scale transmission-related equipment to support this transition has been boosting order growth for GEV’s Electrification business segment, particularly for its Grid Solutions and Power Conversion equipment. This trend, particularly experienced in the UK and North America, must have bolstered GEV’s third-quarter revenues.However, GEV’s Wind business segment is likely to post poor operational results as the company continues to face some critical challenges such as cost pressure and low order volume due to high interest rates. So, its Wind business segment might have witnessed reduced revenues, which, in turn, must have had some adverse impact on GEV’s overall top-line performance.Factors like favorable price, productivity and services volume as well as continued cost reduction initiatives undertaken by GEV are likely to have boosted third-quarter earnings. This, along with solid revenue expectations, might have favorably contributed to the company’s overall bottom-line performance.However, additional costs for being a recently created stand-alone public company, as well as the cost transferred from GE corporate on IT, finance and HR, might have had some adverse impact on GEV’s quarterly earnings.Price Performance & ValuationShares of GE Vernova have surged an impressive 94.2% in the year-to-date period, outperforming the Zacks Alternative-Energy industry’s growth of 42.2% and the broader Zacks Oils-Energy sector’s return of 4.3%. It has also outpaced the S&P 500’s growth of 22.5%.GEV’s YTD PerformanceImage Source: Zacks Investment ResearchA similar stellar performance has been delivered by other industry players, such as Talen Energy Corporation TLN, Constellation Energy Corporation CEG and Verde Clean Fuels VGAS, whose shares have surged 168.2%, 132% and 75%, respectively, year to date.From a valuation perspective, GEV is trading at a premium compared to its industry. GEV’s forward 12-month price-to-earnings (P/E) is 48.33X, a premium to its peer group’s average of 14.08X. This suggests that investors will be paying a higher price than the company's expected earnings growth compared to its peers.GEV’s Price-to-Earnings (Forward 12 Months)Image Source: Zacks Investment ResearchInvestment ThesisIncreasing electricity demand worldwide, driven by rising data center growth as well as incremental electricity consumption, and the resultant growth in grid modernization efforts adopted by utilities have been the key growth catalysts for GEV. The company’s proven prowess in the electric power industry can be gauged from the fact that as of June 2024, approximately 25% of the world’s electricity was generated using GE Vernova’s installed base of technologies. We may expect the company’s third-quarter results to duly reflect these growth trends in terms of notable revenue and earnings growth. However, GEV has been experiencing pressure in its Offshore Wind business recently, related to its product and project costs. As the offshore wind industry continues to face increased challenges, such as increased material costs and persistent supply-chain issues, GEV’s Wind business segment is expected to have delivered a dismal performance in the third quarter, which might be a cause of concern for its investors.Should You Buy GEV Stock Before Q3 Earnings Release?GEV is less likely to disappoint with its third-quarter results, considering its satisfactory year-to-date performance, favorable Zacks Rank, and the positive growth trends offered by soaring demand for renewable equipment and services worldwide. However, considering its premium valuation, negative Earnings ESP and downward revision in its third-quarter earnings estimate, investors interested in this stock should wait until next Wednesday.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 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