GE Vernova's Q4 Was Strong-But the Backlog Number Matters More

Power and electrification company GE Vernova (NYSE: GEV) was a standout performer in 2025, delivering a total return of approximately 99%.

Shares are already up by almost 10% in 2026, buoyed by the company’s latest earnings report. 

GE Vernova continues to see explosive demand in its Power and Electrification segments, leading the company’s backlog to historic levels.

However, with shares trading at a significant premium to the overall market and the industrials sector, the company’s results warrant close examination to assess its outlook.

GEV Beats on Revenue, Sees Large Tax Benefit

GE Vernova released its Q4 2025 earnings before the market opened on Jan. 28. It posted sales of just under $11 billion, or growth of 3.8%. This figure easily beat estimates of $10.2 billion, implying a revenue decline of 3.4%.

The company also posted a massive beat on earnings per share (EPS), with the figure coming in at $13.39. This is compared to estimates of $2.99. However, it is important to note that this was largely due to a $2.9 billion tax benefit the company received, boosting its net income. Absent this benefit, the company’s EPS would have been near or below estimates.

This was a one-time, non-cash benefit and is not overly material to the company’s outlook. This is partly why, despite the huge EPS beat, GEV shares rose only 2.7% on the day of the release.

Orders, Backlog, Margins and Guidance Continue to Show Strength

GEV’s underlying metrics also impressed. Orders continued to grow at a very brisk pace, rising to $22.2 billion. This was a 43% increase versus $14.6 billion just one quarter ago. The company also saw its backlog rise by $15 billion to $150 billion.

The Power and Electrification segments largely drove this, with orders rising 50% and 45%, respectively, compared to Q3 2025. The backlogs in these segments also rose 12% and 15% during the same period. The moral of the story is that GE Vernova is receiving orders far faster than it can fill them. The company’s approximately 2x book-to-bill ratio may be the best indicator of this dynamic. During the quarter, the value of products or services customers agreed to receive in the future was double GEV’s revenue. This provides strong visibility into the company’s ability to continue growing sales.

The company also achieved significant improvements in profitability. Notably, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin rose by 40 basis points to 10.7%. Additionally, over the full year, GEV’s free cash flow rose 118% to $3.7 billion.

The company boosted its guidance projections to account for its planned acquisition of GE Prolec, which it expects to close on Feb. 2. It now sees itself generating $56 billion in revenue by 2028, up from prior estimates of $52 billion. Furthermore, GEV anticipates that from 2025 to 2028, it will generate cumulative free cash flow of over $24 billion, indicating very significant growth going forward.

Updated Targets Imply +15% Upside After Stellar 2025

Wall Street analysts significantly upgraded their forecasts on GE Vernova shares after the company’s earnings report. Citigroup raised its price target by approximately 10% to $779. TD Cowen also lifted its projections, moving its price target up almost 15% to $780.

The MarketBeat consensus price target on GE Vernova sits just above $731, implying approximately 2% upside versus the stock’s Jan. 29 closing price. However, price targets updated between Jan. 28 and Jan. 29 are significantly more bullish, averaging around $842. This figure suggests that shares could rise 17%.

GEV’s forward price-to-earnings ratio (P/E) sits at approximately 54x. This is more than double the S&P 500’s forward P/E of 22x, and the S&P 500 industrial sector’s forward P/E of 25x. Despite its premium valuation, with robust demand and strong expected free cash flow growth, GE Vernova continues to look reasonably attractive. Still, given GEV's price, an unexpected bump in the road could exert serious downward pressure on the stock.

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The article "GE Vernova’s Q4 Was Strong—But the Backlog Number Matters More" first appeared on MarketBeat.