GEV

We rate GE Vernova Inc. (GEV) as a Buy with a composite score of 68.1/100 at a current price of $874.41. The stock scores above average across the majority of our six quantitative factors and ranks #150 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in quality (79th percentile) and momentum (78th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (46/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

GE Vernova Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 68.1/100 places it at rank #150 in our full 7,333-stock universe. With a $177.2B market capitalization, GE Vernova Inc. operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 22% and momentum in the 78th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 40th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 18% (-25.0pp vs sector) narrow to operating margins of 1% (-0.2pp vs sector) and net margins of 3.0%, yielding a gross-to-net conversion rate of 17%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $874.41, GE Vernova Inc. is trading near fair value based on current fundamentals. Our value factor score of 70/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 201.6x (a 806% premium to the sector median of 22.3x), EV/EBITDA of 522.9x (at a premium), P/B of 18.2x, P/S of 6.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to GE Vernova Inc.. Key risk factors include elevated market sensitivity (beta of 1.58), significant leverage (412% debt-to-equity), elevated valuation multiple (P/E 201.6x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.58); significant leverage (412% debt-to-equity); elevated valuation multiple (P/E 201.6x) that leaves limited margin for error; the combination of leverage (412% D/E) and thin margins (3.0% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 59th percentile and quality factor at the 79th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: large-cap scale ($177.2B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate GE Vernova Inc.'s capital allocation as Poor. Key concerns include elevated leverage (412% D/E), weak asset returns (ROA 1.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — GE Vernova Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, GE Vernova Inc. receives a Buy rating with a composite score of 68.1/100 (rank #150 of 7,333). Our quantitative framework assigns a Narrow Moat (46/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a constructive view on GE Vernova Inc.. The combination of identifiable competitive advantages, high uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.