GE Vernova lifts 2026 free-cash-flow outlook to $16 bn-$17 bn

GE Vernova raised its 2026 free-cash-flow forecast to $16 billion to $17 billion on Wednesday, Oct. 28, after third-quarter revenue rose 27% to $12.64 billion, above LSEG's estimate, a CNBC Investing Club article reported.

The full-year cash-flow target was $11.5 billion to $12.5 billion previously and compares with FactSet's $12.4 billion estimate; the article said shares fell as investors weighed gas-order timing.

Earnings per share rose 193% in the third quarter to $4.81, above LSEG's $3.94 consensus estimate, according to the article. Revenue also beat LSEG's $11.99 billion estimate for the quarter ended Sept. 30.

GE Vernova lifted its 2026 revenue outlook to $46.5 billion to $47.5 billion, from $45.5 billion to $46.5 billion previously, according to the article. The company also raised its adjusted EBITDA margin outlook to 13.5% to 14.5%, from 12% to 14%; EBITDA is earnings before interest, taxes, depreciation and amortization.

Chief Executive Scott Strazik said on the earnings call that 2027 gas growth may be less front-loaded than in early 2026. “As we look into 2027, although it’s hard to call the quarters, per se, at this point, we certainly continue to see real growth in our gigawatts on contract throughout 2027,” he said.

Gas order cadence

The order debate centers on whether demand is slowing or merely becoming more uneven. GE Vernova signed 21 gigawatts of new gas-equipment contracts in the first quarter, 20 gigawatts in the second quarter and 11 gigawatts in the third quarter, while guiding to 13 gigawatts in the fourth quarter, the article said.

Backlog still expanded. Gas Power backlog increased to 122 gigawatts from 116 gigawatts in the quarter, and GE Vernova expects to end 2026 with 130 gigawatts, above an April expectation of at least 110 gigawatts and a July target of 125 gigawatts, according to the article.

In dollar terms, orders reached $29.3 billion, up 96% year on year, with a book-to-bill ratio above 2, the article said. A book-to-bill ratio above 1 means new orders exceeded delivered sales, adding to backlog and improving revenue visibility.

The company ended the quarter with a backlog of about $197 billion. That was roughly 4.2 times the midpoint of its new 2026 revenue outlook, according to Atlas360 calculations, showing how much future delivery work is already contracted or reserved.

GE Vernova also doubled its share-repurchase authorization to $20 billion. Strazik said, “After investing $1.6 billion of the buyback in 3Q and over $1.3 billion in October, we have largely completed our $10 billion authorization with excellent returns, having acquired 15.6 million shares at an average price of approximately $635.”

The company said it agreed to buy privately held Trench Group for $9 billion in a deal expected to close in late 2027, according to the article. GE Vernova expects to fund the acquisition equally with cash and debt, and said the deal should add $50 million to $100 million in annualized cost savings by 2030.

Trench makes high- and medium-voltage grid equipment, including bushings used in power transformers. The $9 billion purchase price equals 45% of GE Vernova's expanded $20 billion buyback authorization, according to Atlas360 calculations.

The acquisition follows GE Vernova's $5 billion purchase of the remaining stake in transformer maker Prolec, announced eight months earlier, according to the article. Prolec is performing ahead of expectations on cost and revenue synergies, the article said, citing management commentary.

The CNBC Investing Club article reiterated its buy-equivalent 1 rating on GE Vernova but cut its price target to $1,200 from $1,300, citing valuation pressure across companies tied to artificial-intelligence infrastructure buildout.

Backlog and deal tests

Items to track start with GE Vernova's year-end 2026 Gas Power backlog target of 130 gigawatts, compared with 122 gigawatts at the end of the third quarter and at least 110 gigawatts expected in April, according to the article.

The fourth-quarter 2026 gas-equipment contract target is 13 gigawatts, following 21 gigawatts in the first quarter, 20 gigawatts in the second quarter and 11 gigawatts in the third quarter. The figure will test whether lower quarterly additions still support backlog growth.

GE Vernova expects the Trench acquisition to close in late 2027 and to deliver $50 million to $100 million in annualized cost savings by 2030. The article said Trench's adjusted EBITDA margin is expected to rise to about 36% by 2028 from about 33% in 2026.