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Today's Bonus Story
GE Vernova's Q4 Was Strong—But the Backlog Number Matters More
Authored by Leo Miller. Published: 1/31/2026.
What You Need to Know
- GE Vernova is already up considerably in 2026 after nearly doubling in value last year.
- The company's Q4 report confirmed investor optimism, as the company's orders and backlog soared.
- Despite trading at a high valuation multiple, the company's impressive demand and cash flow projections are hard to ignore.
Power and electrification company GE Vernova (NYSE: GEV) was a standout performer in 2025, delivering a total return of approximately 99%.
Shares are already up by almost 10% in 2026, buoyed by the company's latest earnings report.
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GE Vernova continues to see explosive demand in its Power and Electrification segments, pushing its backlog to record levels.
However, with shares trading at a meaningful premium to the overall market and the industrials sector, the company's results warrant close examination to assess the outlook.
GEV Beats on Revenue, Sees Large Tax Benefit
GE Vernova released its Q4 2025 earnings before the market opened on Jan. 28. It reported sales of just under $11 billion, up 3.8% year over year. That easily beat estimates of $10.2 billion, which had implied a 3.4% year-over-year decline.
The company also posted a very large beat on earnings per share (EPS), with EPS coming in at $13.39 versus estimates of $2.99. Much of that gap reflected a $2.9 billion tax benefit that boosted net income. Absent that one‑time benefit, EPS would have been near or below consensus estimates.
The tax benefit was non-cash and one-time, so it is not central to the company's operational outlook. That is partly why GEV shares rose only 2.7% on the day of the release despite the huge EPS surprise.
Orders, Backlog, Margins and Guidance Continue to Show Strength
GEV's underlying metrics also impressed. Orders rose sharply to $22.2 billion, a 43% increase versus $14.6 billion just one quarter earlier. The company also saw its backlog increase by $15 billion to $150 billion.
The Power and Electrification segments largely drove the strength, with orders up 50% and 45%, respectively, compared with Q3 2025. Backlogs in those segments grew 12% and 15% over the same period. The takeaway is that GE Vernova is receiving orders faster than it can fulfill them. The roughly 2x book-to-bill ratio is the clearest indicator of that dynamic: during the quarter, customers' committed future orders were about double GEV's revenue, which provides strong visibility into future sales growth.
The company also achieved notable improvements in profitability. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin rose 40 basis points to 10.7%. Over the full year, GEV's free cash flow climbed 118% to $3.7 billion.
Management raised guidance to reflect its planned acquisition of GE Prolec, which it expects to close on Feb. 2. The company now expects to generate $56 billion in revenue by 2028, up from prior estimates of $52 billion. It also forecasts cumulative free cash flow of more than $24 billion from 2025 through 2028, signaling substantial expected cash generation.
Updated Targets Imply +15% Upside After Stellar 2025
Wall Street analysts materially upgraded their outlook for GE Vernova after the earnings report. Citigroup raised its price target roughly 10% to $779, and TD Cowen lifted its target nearly 15% to $780.
The MarketBeat consensus price target for GE Vernova sits just above $731, implying about 2% upside versus the stock's Jan. 29 closing price. Price targets updated between Jan. 28 and Jan. 29, however, are noticeably more bullish, averaging around $842 — suggesting roughly 17% upside.
GEV's forward price-to-earnings ratio (P/E) is about 54x. That is more than double the S&P 500's forward P/E of 22x and above the S&P 500 industrial sector's forward P/E of 25x. Despite the premium valuation, robust demand and strong expected free cash flow growth make GE Vernova appear reasonably attractive. Still, given its high valuation, any unexpected setback could put meaningful downward pressure on the stock.
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