GE Vernova: Encouraging 2Q26 Results Driven by Strong Free Cash Flow; Power and Electrification Demand Remains Robust

研报英文原文证据摘录

GE Vernova: Encouraging 2Q26 Results Driven by Strong Free Cash Flow; Power and Electrification Demand Remains Robust

4.5-15.0 billion (v. $14.0-14.5 billion prior) while maintaining the

respective segment margin ranges (17-19% for Power, 18-20% for Electrification).

NEGATIVES:

• Margins fell modestly short of consensus expectations. Adjusted EBITDA of $1.25

billion was modestly below $1.29 billion consensus, and the 11.3% adjusted EBITDA

margin trailed the 11.9% consensus estimate despite expanding 280bp y/y. GEV

maintained its 12-14% FY26 margin guidance on higher revenue and FCF guidance.

• Wind remains the principal operating weakness. Wind revenue declined 10% y/y to

$2.03 billion, orders fell 40% organically, and reported segment EBITDA losses widened

to $275 million (worse than $248 million consensus) from $165 million in 2Q25. Lower

Onshore Wind equipment deliveries and higher Offshore Wind project costs drove the

deterioration, while Wind backlog declined both sequentially and y/y. GEV maintained

its expectation for approximately $400 million of FY26 Wind losses, which implies an

improvement in 2H26 following $657 million of losses incurred in 1H26.

OUR TAKE:

• 2Q26 results maintained the positive credit trajectory for GEV. GEV’s 2Q26 results

were encouraging, overall, with revenue slightly outperforming, margins modestly

underperforming, but free cash flow was meaningfully above consensus expectations

driven by cash advance payments related to new gas turbine orders. The company also

raised FY26 revenue guidance by ~$1 billion to ~$46 billion at the midpoint and raised

free cash flow guidance by ~$5 billion to ~$12 billion at the midpoint, reflecting the 2Q26

outperformance with implied 2H26 revenue and free cash flow guidance ($25.55 billion