GE Vernova (GEV -7.48%) stock has had an incredible run over the last few years and is up 48% over the last year alone. Still, that run is far from over, given the orders and earnings momentum displayed in the third quarter. There’s no sign of a slowdown in its end markets, and if anything, they appear to be accelerating.
GE Vernova’s key growth driver
The company’s core power segment (mainly gas power turbine equipment and services) operates a razor/razorblade model, where gas turbine (razors) equipment sales lead to installed equipment and afterward a long stream of lucrative services revenue (razorblades), which are typically sold on long-term service agreements (LTSA) attached to turbine sales.
GEV – GE Vernova
$770.51-$62.32 (-7.48%)
NYSE · As of 4:00 PM ET 11/05/26
As such, if you want to know where GE Vernova’s earnings are headed, then you need to keep an eye on its orders and backlog growth, and in particular the heavy-duty gas turbine orders that drive higher services revenue. For reference, the company’s largest gas turbine is its H-class HA turbine.
Why HA turbines matter
CEO Scott Strazik outlined the importance of the HA turbine at a Morgan Stanley conference in September, noting that the 130 machines it has running today produced $1 billion of the power segment’s $24 billion current run rate of revenue. However, by the end of next year, the company expects to have more than 400 running.
“That’s 200 gigawatts (GW) or thereabouts of incremental power in which every gigawatt of HAs will generate $0.5 billion of high-margin services revenue over the first 20 years of its lifetime,” he said. In other words, it’s $1 billion in revenue now, but GE Vernova has “$100 billion of future services revenue” from HA turbines under contract, Strazik noted.
Image source: Getty Images.
The first three numbers that investors should look at when GE Vernova gives earnings are its total backlog growth, power (new gas equipment) orders growth (in power terms, measured in GW), and its HA turbine orders growth.
The key numbers from GE Vernova’s third quarter
First, returning to what Strazik said in September about hitting the “humble milestone” of $200 billion in backlog “very early in 2027,” the reality is that GE Vernova has probably already surpassed that figure in Q4, as it hit $197 billion in the third quarter.
Second, new gas equipment orders continue to grow, with 11 GW in Q3 on top of 21 GW in Q1 and 20 GW in Q2. Strazik expects a further 13 GW in Q4. Finally, HA turbine orders of 21 units in the quarter provided more evidence of improving momentum.
Data source: GE Vernova, chart by author. Heavy-duty gas turbine orders include HA orders.
Where next for GE Vernova
The ongoing improvements in orders, backlog growth, and strong unit orders for HA turbines are evidence of burgeoning growth in installed equipment, which means significantly more revenue from higher-margin gas power turbine services in the future. As such, today’s equipment orders aren’t just near- or even medium-term revenue and earnings; they are setting off a cascade of long-term earnings.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
