When the former General Electric conglomerate completed the spin-off of its energy business as GE Vernova (GEV -0.57%) in April 2024, its wind component accounted for nearly one-third of revenue. That business has continued to decline since then, but GE Vernova shareholders probably don't mind too much.
Wind orders decreased another 40% year over year in Q2, and the stock has dropped about 15% since that report on July 22. Some of that selling may have been profit-taking, as the stock is still up 40% this year. But I wouldn't sell GE Vernova stock based on that report, or even after that big gain. In fact, the company is very well positioned with its diversified business.
Image source: The Motley Fool.
Investors can look at the wind business as a bonus now. That's because the company's power and electrification segments are booming. Despite the sharp drop in wind business orders, GE Vernova reported 88% organic order growth overall in the second quarter.
That's why the stock price drop presents an opportunity. GE Vernova is poised to generate significant value. Management took on a manageable amount of debt earlier this year to acquire the remaining 50% stake of ProlecGE, formerly a joint venture with a Mexican industrial group. That company is a major producer of power transformers and electrical equipment essential for the generation, transmission, and distribution of electric power.
NYSE: GEV
Key Data Points
Demand is clearly accelerating and driving margin expansion at GE Vernova. While some investors took profits recently, I would instead take a long-term approach and remain a buyer of GE Vernova stock.
