GEV Stock Underperforms Industry in a Month: What Should Investors Do?

GE Vernova Inc. GEV shares have risen 0.2% in the past month, underperforming its  Zacks Alternate Energy – Other industry’s growth of 9.2%. The company faces risks associated with major supply-chain disruptions, such as the high cost or unavailability of products, components, and raw materials that are necessary for its operations, as well as major interruptions to its production and manufacturing facilities and distribution networks.   
 

Other alternative energy stocks, such as Crescent Energy Company CRGY and Talen Energy Corporation TLN, have also underperformed the industry in the past month. Shares of CRGY have lost 4.5% while those of TLN have gained 1.9% during the same timeframe.

Let’s examine the factors that might have led to the stock’s underperformance.

Challenges Faced by GEV

GE Vernova is currently facing some difficulties, which are adversely impacting its performance. Notably, manufacturers in a variety of industries have recently faced the global supply-chain problem, and GE Vernova is no exception.

The company relies on complex global supply networks for components used in its gas turbines, wind turbines and grid infrastructure. Specifically, it purchases nearly $20 billion in materials and components sourced from over 100 countries. Therefore, disruptions in the availability of raw materials, along with logistical delays, have affected and may adversely impact GE Vernova’s production timelines and raise its input costs, thereby hurting its bottom line.

GEV designs and delivers advanced industrial products and software-driven solutions for complex projects like gas turbines, wind turbines, grid systems and nuclear power. Because these technologies operate under demanding conditions, any design, manufacturing, or performance failure can lead to severe consequences including injuries, power outages, delays, environmental harm, or costly warranty and repair claims. Such incidents might also damage its reputation, disrupt operations and cause financial losses.

Offshore wind turbine installation and maintenance are vulnerable to weather delays, high winds, and difficult site access, leading to unpredictable operations and service demand. Limited suitable site availability or mismatched turbine specifications can also hinder sales and negatively impact business performance, cash flow and financial results.

Factors Acting in Favor of GEV

By leveraging its 10 years of experience in delivering cutting-edge products like turbines and blades, GE Vernova capitalizes on the growing tendencies of the wind sector. At the moment, the company has about 57,000 wind turbine units, with a total installed capacity of over 120 GW.

The company also benefits from its diversified business across Power, Wind, and Electrification, which allows it to provide customers with a full suite of solutions, from gas and nuclear to wind energy and grid technology. Because of its flexibility, the business appeals to a broad range of customers and remains resilient to market changes.

GEV Stock’s Earnings Estimates

The Zacks Consensus Estimate for 2025 and 2026 earnings per share (EPS) indicates a decrease of 2.04% and 3.42%, respectively, in the past 60 days. 
 

The Zacks Consensus Estimate for Crescent Energy Company’s 2025 and 2026 EPS indicates an increase of 6.62% and 10.29%, respectively, in the past 60 days. The bottom-line estimate for Talen Energy’s 2025 EPS indicates a decline of 11.7% and that for 2026 implies an increase of 5.64% in the past 60 days.

GEV’s Earnings Surprise History

The company beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 38.03%.

GEV’s Return on Equity Lower Than Sector

The company’s trailing 12-month return on equity of 13.23% is lower than the sector average of 15.07%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

GEV Stock Trades at a Premium

GE Vernova is currently trading at a premium compared to its industry on a forward 12-month P/E basis.
 

Crescent Energy Company and Talen Energy are trading at a discount compared with the industry’s P/E F 12M.

What Should Investors Do?

GE Vernova benefits from its diversified business and has the ability to expand even further and boost its operations. 
However, the company faces risks related to supply-chain disruptions. Disruptions in the availability of raw materials could adversely impact its financial performance. 

Considering its price underperformance, low ROE, declining earnings estimates, and premium valuation, it is advisable for investors to avoid this Zacks Rank #4 (Sell) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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This article originally published on Zacks Investment Research (zacks.com).

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