GE Vernova's Q4: Not Perfect, But Analysts Boost Price Forecast on Orders Strength
Thursday, Jan 23, 2025 2:15 pm ET
3min read GE Vernova, the aerospace and defense giant, reported its Q4 2024 earnings, and while the results were not flawless, analysts have adjusted their price forecasts upward, citing continued orders strength. The company's revenue grew by 16% year-over-year (YoY), driven by robust demand for both services and equipment. However, profit growth of 49% and free cash flow (FCF) growth of 21% were the standout figures, leading analysts to revise their price targets.
GE Vernova's Q4 performance was marked by several key factors:
1. Revenue Growth: The company's revenue grew by 16% YoY, with the commercial engines and services (CES) segment contributing significantly to this growth. Orders for CES were up 50%, and revenue grew by 19%.
2. Profit Growth: GE Vernova's profit increased by 49% in Q4, driven by services volume, favorable mix, and price. This led to a significant increase in earnings per share (EPS), which more than doubled from the previous quarter.
3. Free Cash Flow Growth: The company's FCF grew by 21% in Q4, driven by higher earnings. For the full year, FCF grew by almost 30% to $6.1 billion, with conversion over 120%.
Analysts have adjusted their price forecasts for GE Vernova following the Q4 results, citing continued orders strength and the company's strong performance in key financial metrics. The forward P/E ratio has decreased to 31.92, indicating that the market expects the company's earnings to grow in the future. This aligns with GE Vernova's guidance for EPS growth of 15% at the midpoint in 2025.
In conclusion, while GE Vernova's Q4 results were not perfect, the company's strong performance in key financial metrics, combined with continued orders strength, has led analysts to adjust their price forecasts upward. The company's guidance for 2025, which includes mid-single-digit revenue growth, increased military spending, and solid low double-digit revenue growth, further supports its potential for future growth.
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