Core Insights - GE Vernova (GEV) has experienced significant stock price fluctuations, with shares up nearly 80% year-to-date but recently declining by about 10% from an all-time high of over $664 in early August [1][7]. - The company reported Q3 2025 earnings, with revenue just under $10 billion, exceeding analyst expectations by over $800 million and achieving a growth rate of 11.8%, the fastest in seven quarters [3][4]. - Despite missing earnings per share (EPS) forecasts, GEV's order volume surged by 55% to $14.6 billion, resulting in a substantial backlog of $135 billion, indicating strong demand for its services [4][5]. Financial Performance - GEV's adjusted EBITDA margin improved by 600 basis points year-over-year to 8.1% [5]. - The company announced the acquisition of 50% of its Prolec GE joint venture, enhancing its participation in the North American power grid market, which is expected to grow by around 10% annually through 2030 [5][6]. - Prolec's EBITDA margin is approximately 25%, which is anticipated to positively impact GEV's overall margin profile [6]. Valuation and Market Sentiment - The decline in GEV's forward P/E ratio from around 66x to 54x represents an 18% drop, while the trailing P/E ratio fell from 160x to 97x, a 40% decrease, indicating improved earnings despite the stock price decline [8][9]. - Analysts believe that GEV's valuation is now more supported by actual and expected earnings growth rather than optimistic sentiment, positioning the stock favorably for future performance [10]. Analyst Outlook - Wall Street analysts have updated their price targets for GEV, with an average target of $607.59, suggesting a 3.92% upside potential, while some analysts project a high target of $758.00, indicating approximately 15% upside potential [11][12]. - The average price target among recent updates was $688, contrasting with the MarketBeat consensus of around $607, reflecting a more bullish outlook from analysts [12]. Conclusion - GEV's improving fundamentals, strong order growth, and strategic acquisitions provide a solid foundation for potential long-term gains, despite recent stock price volatility [13].

Core Insights - The Carillon Scout Mid Cap Fund's second quarter 2025 investor letter highlights the performance of the Russell Midcap Index, which posted positive returns despite a sell-off in early April due to tariff announcements [1] - GE Vernova Inc. (NYSE:GEV) is a key holding in the fund, showing a one-month return of -4.51% but a significant 189.60% increase over the past 52 weeks, with a market capitalization of $164.89 billion as of September 09, 2025 [2][3] Company Overview - GE Vernova Inc. specializes in technologies and services for generating, converting, storing, and managing electricity, including gas, nuclear, wind, solar, and grid solutions [3] - The company is expected to benefit from significant electricity demand growth driven by AI data centers and other factors, with earnings expectations trending higher due to a backlog extending into the next decade [3] Market Position - As of the end of the second quarter, 106 hedge fund portfolios held GE Vernova Inc., a slight decrease from 111 in the previous quarter, indicating a stable interest among institutional investors [5] - Despite its potential, some analysts suggest that certain AI stocks may offer greater upside potential and less downside risk compared to GE Vernova Inc. [5]

Financial Data and Key Metrics Changes - The company reported a 4% year-over-year increase in orders, totaling $12.4 billion, with equipment orders growing by 5% driven by power, which more than doubled year-over-year [21] - Revenue increased by 12%, with equipment revenue growing by 18% and services revenue increasing by 6% [22] - Adjusted EBITDA rose over 25% to $770 million, with an adjusted EBITDA margin expansion of 80 basis points [23] Business Line Data and Key Metrics Changes - Power orders grew by 44%, with gas power equipment orders nearly tripling year-over-year [26] - Wind orders decreased by 5% year-over-year, primarily due to lower onshore wind equipment orders outside of North America [30] - Electrification orders remained strong at approximately $3.3 billion, although total orders decreased by 31% year-over-year due to large orders recorded in the previous year [33] Market Data and Key Metrics Changes - The equipment backlog grew from $45 billion to $50 billion in Q2, with a total backlog now reaching $129 billion [17][18] - The company expects at least $1.5 billion of agreements in the Middle East to convert into orders in Q3 [9] - Demand for data centers remains strong, with nearly $500 million in orders in the first half of 2025 [10] Company Strategy and Development Direction - The company is focusing on robotics and automation as part of its strategy to improve productivity and efficiency [13] - There is a strong emphasis on maintaining financial strength while investing in organic growth and strategic acquisitions [14][15] - The company plans to restructure to improve efficiency, with expected costs of approximately $250 million to $275 million over the next twelve months [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential driven by electrification and power markets, with expectations for continued margin improvement [5][42] - The company anticipates challenges in the European HVDC market but sees strong momentum in other segments [10] - Management highlighted the importance of maintaining a disciplined approach to pricing and project management in the electrification segment [50][51] Other Important Information - The company ended Q2 with a cash balance of approximately $8 billion and no debt, allowing for continued investment in growth and shareholder returns [25] - The company has repurchased approximately $1.6 billion in stock year-to-date [14] Q&A Session Questions and Answers Question: Can you provide more color on the demand outlook for the electrification segment, particularly regarding regional differences? - Management noted that while Europe is losing steam, Asia is picking up, and there is a need to drive variable cost productivity due to decelerating pricing [49][50] Question: What is the pricing dynamic for services in the Gas Power business? - Management indicated that there is a price-up environment in services, which will materialize in the income statement over the next 12 to 24 months [54] Question: Why are gross margins declining, particularly in service gross margins? - Management explained that the gross margins moved due to the mix of revenues between equipment and services, which is expected to set up for a positive future [87]