GE Vernova shares fall despite stronger orders and raised cash-flow outlook

GE Vernova shares fell about 8% on Wednesday after the company’s second-quarter earnings per share came in below Wall Street estimates, even as revenue, orders and free cash flow exceeded expectations cited by LSEG. Revenue for the quarter ended June 30 rose about 22% from a year earlier to $11.1 billion, ahead of the $10.7 billion consensus estimate, while earnings per share increased 33% to $2.47, below the $3.01 expected by analysts, according to CNBC and LSEG data.

The decline put attention on a divide in the results: reported profit missed estimates, while demand indicators strengthened across the company’s power and grid-related businesses. CNBC’s Investing Club said the order book was a more relevant measure of demand than quarterly earnings, pointing to a 95% reported increase in orders to $24.2 billion, or 88% growth on an organic basis.

GE Vernova’s backlog reached $176 billion, supported by order growth that pushed the company’s total book-to-bill ratio above 2 in the quarter. Book-to-bill compares new orders with revenue recognized from deliveries. A ratio above 1 indicates that incoming orders exceed completed sales; above 2 means the company booked more than twice as much business as it converted into revenue during the period.

Management said on the earnings call that its gas power business is “mostly sold out through 2030” and that more than half of 2031 production slots are expected to be sold by year-end, according to CNBC. Chief executive Scott Strazik said GE Vernova remained on course to reach a $200 billion backlog in 2027.

Free cash flow was another stronger-than-expected item. CNBC reported that free cash flow rose more than 2,500% year on year to $5.12 billion, compared with an estimate of $1.2 billion. Management attributed the increase to larger customer down payments and slot reservations in the Power segment.

Power and electrification drive demand

In Power, revenue rose 14% on both a reported and organic basis to $5.48 billion, below the $5.6 billion estimate cited by CNBC. Segment orders increased 134% organically from a year earlier, lifting the Gas Power backlog to 53 gigawatts, with a further 63 gigawatts covered by slot reservation agreements.

Strazik told analysts that the long-cycle electric power industry was in the early phase of a “multi-decade growth opportunity” and cited “strong global demand” for the company’s equipment and services. GE Vernova said it plans to expand annual production capacity to 20 gigawatts by the end of the current quarter, 24 gigawatts in 2028 and 30 gigawatts by 2030.

Electrification revenue rose 68% on a reported basis, or 29% organically, to $3.64 billion, above the $3.44 billion estimate cited by CNBC. The unit, which includes transformers, switchgear and grid software, delivered an EBITDA margin of 18.4%, up 390 basis points from a year earlier. Strazik said data center orders in Electrification reached $2.7 billion in the second quarter and exceeded $5 billion in the first half of 2026.

Wind remained the weakest of the three segments. Revenue fell 10% to just over $2 billion, while the segment posted negative EBITDA of $252 million. Its EBITDA margin was negative 13.6%, compared with negative 7.3% a year earlier, according to CNBC.

Guidance moves higher

GE Vernova raised its 2026 revenue outlook to a range of $45.5 billion to $46.5 billion, from $44.5 billion to $45.5 billion previously, and above the $45.45 billion estimate cited by LSEG. The company maintained its full-year adjusted EBITDA margin target of 12% to 14%, according to CNBC.

The company also lifted its full-year free cash flow forecast to $11.5 billion to $12.5 billion, from an earlier range of $6.5 billion to $7.5 billion. For the third quarter, management expects Power organic revenue growth of 17% to 19%, Electrification revenue of $3.8 billion to $4 billion, and Wind revenue to decline by a low-double-digit percentage, with Wind EBITDA around breakeven.

This story draws on original reporting from CNBC.