Electrifying and decarbonizing our future; Initiate at Buy. We initiate coverage of GEV with a Buy rating and $154 price target. GEV is a global electric power (i.e., gas, wind, nuclear, hydro, solar) company that provides equipment/services to generate, transfer, convert and store electricity. Over the long-term, we are optimistic on GEV’s position in helping the world electrify and decarbonize given GEV’s assets serve > a $250bn market with a current backlog > $100bn. By 2040, the IEA expects the demand for electricity generation to increase by 55%, implying generation capacity would need to increase by 100% given intermittent Renewables are likely to be the biggest incremental driver. Additionally, we have been encouraged by the progress this management team has made over the last 2+ years to make GEV a structurally more profitable enterprise and think there is still meaningful under-earning potential in the coming years (see below). We think the largest opportunity will come from the growth in Wind as well as improved profitability in the Electrification business. Hence, we see a path to ~$4bn/$2.3bn in EBITDA/FCF by 2026. As such, we initiate with a Buy rating as we believe GEV is uniquely positioned to benefit as the energy transition unfolds and the multiple in the shares should re-rate as underlying fundamentals improve. Our $154 price target implies ~10x our 2026E EBITDA.
Investment thesis
Uniquely positioned to electrify and decarbonize our future. GEV's installed base of turbines (gas, steam, nuclear, hydro, wind, etc.) and aeroderivatives currently provide ~30% of the world's electricity. Going forward, the IEA believes electricity capacity will need to increase by 100% in order to meet stated policy and net zero commitments. This means that capacity investment in the next 20 years (12.5K GW) will likely be double the investment made in the previous 40 years (6K GW). Additionally, we expect Gas Power, where GE has dominant share (~50%), to remain a reliable source of baseload electricity at least through the end of the decade (~40% of electricity share in 2030, similar to today) and should grow with anticipated power generation investment (~5% CAGR). Government regulations to support decarbonization efforts (e.g., IRA, Green Deal, etc.) should bolster Onshore Wind growth in the coming years, particularly in the US where GE has market leading share. Lastly, while GEV's Electrification assets have historically been Europe centric, we believe GEV's advanced grid technologies will play a crucial role in modernizing, integrating and automating the grid going forward. Significant Electrification orders (>$10bn in Grid Solutions or B2B > 2.5x) in 2023 helps support GEV's position in this burgeoning market.
Turnaround story underway with Gas Power leading the way. The history of the Power business is complex. On one hand, the Power business operates in a razor/razor blade model with a long aftermarket tail that should provide stability in earnings/FCF going forward given that Services account for ~68% of Power revenues Exhibit 15. However, history suggests otherwise as Power EBIT was extremely volatile over the past decade, with profit turning negative in 2018 after averaging > $5bn from 2008-2016. There are several reasons for the decline in performance, including a challenging Alstom integration (> $13bn acquisition in 2015 that resulted in a $23bn goodwill write down in 2018), underutilized assets ahead of a CEO transition in 2017 and changes in accounting practices (ASC 606) in 2018 that changed the way GE recognized long-term revenue/profits. After bottoming in 2018, the Power business has been in turnaround mode, and we've been encouraged by the progress, particularly in Gas Power, which turned profitable ahead of schedule in 2022 (by a year). In 2024, we expect the entire Power business to achieve double digit profitability, a milestone that didn't appear achievable a few years ago. The stories in Onshore Wind and Grid are not too dissimilar with the current management team achieving profitability ahead of schedule (Grid in 2022, Onshore Wind in 2H23). Offshore Wind is still a work-in-progress but the company is getting through unprofitable backlog faster-than-expected and there is line of sight to breakeven profitability by 2026.
Meaningful under-earning potential with the greatest opportunities in Wind and Electrification. Despite all the progress made in the last few years, we believe there is still meaningful under-earning potential across the portfolio. Specifically, within Onshore Wind, the IRA drove > $10bn in orders in 2023 (B2B: > 1.3x) and this will start to ramp in 2H24 (guidance is for flat Wind growth in 2024). We believe consensus is under-estimating not just 2025 Onshore Wind organic growth (GS 2025 Onshore Wind growth: +8%) but also profitability as Onshore Wind (GS 2025 Onshore Wind margins: ~13%) should exit 2024 with at least low-teens margins. Electrification represents another large under-earning opportunity. Similar to Onshore Wind, Grid 2023 orders were > $10bn (B2B: > 2.5x) with Electrification backlog more than doubling ($13bn in 2024 vs. $6bn in 2023). Today, Electrification has MSD margins, but we believe the entitlement is higher, similar to peers like ABB/Hitachi/Siemens Energy's comparable segments (~22%/11%/10% 2023 EBITDA margins). Importantly, we expect 50% of 2023 ending backlog to ship in 2026 at much higher margins than today (GS 2026 Electrification margins: ~9%). Further, given most of the backlog is in Europe today, we believe there is a multi-year tailwind from US grid investment that is under-appreciated. As a result, our GEV 2025/2026 EBITDA is +12%/+9% and FCF is +23%/+13% vs. the Street.
Valuation. We initiate coverage of GEV with a $154, 12-month price target. Relative to peers, we believe GEV's sales and EBITDA growth will outpace peers in the coming years and the company should also generate strong FCF growth. While EBITDA margins are lower than peer average, Offshore Wind is still a headwind to earnings through 2025 and we believe investors should look out to 2026 when assessing the earnings power of the company. Lastly, GEV also has a solid balance sheet with a net cash position. All in, we ascribe a 13.0x Q5-Q8 EBITDA multiple (implies ~10x multiple on our 2026 forecast) to GEV which implies a FCF yield of ~4.5%/5.5% on our 2025/2026 estimates.
Risks.
1. Slower growth due to regulatory/geopolitical changes given that the acceleration in US Onshore Wind and profitability improvement in Electrification are key drivers of our above consensus expectations. For example, we expect Onshore Wind to grow +8%/+6% in 2025/2026 driven primarily by the US IRA. We also expect Electrification growth to sustain HSD and for profitability to improve materially in 2026 driven by what's already been booked into backlog.
2. Project delays from supply chain disruptions could cause higher cost/unavailability of raw materials, components, and products. In our EBITDA bridge from 2023-2026, this could cause price/productivity tailwinds to abate and lower our profitability expectations.
3. Execution risk particularly on complex, Offshore Wind projects. We currently do not forecast GEV expanding backlog in Offshore Wind and expect that business to achieve breakeven profitability by 2026. To the extent GEV enters into additional contracts and does not appropriately underwrite the risks associated with those contracts, that could result in downside risk to our estimates.
| GEV | 12m Price Target: $154.00 | Price: $131.75 | Upside: 16.9% |
| Market cap: $36.2bn |
| Enterprise value: $31.0bn |
| 3m ADTV: NA |
| United States |
| Americas Multi-Industry |
| M&A Rank: 3 |
| 12/23 | 12/24E | 12/25E | 12/26E | |
|---|---|---|---|---|
| Revenue ($ mn) | 33,239.0 | 34,673.1 | 36,693.0 | 37,357.9 |
| EBITDA ($ mn) | 570.0 | 2,202.7 | 3,089.1 | 3,996.8 |
| EBIT ($ mn) | (277.0) | 1,355.7 | 2,225.1 | 3,115.6 |
| EPS ($) | (2.86) | 3.80 | 6.15 | 8.60 |
| P/E (X) | NM | 34.7 | 21.4 | 15.3 |
| EV/EBITDA (X) | -- | 13.9 | 9.3 | 6.6 |
| FCF yield (%) | NM | 2.8 | 5.2 | 6.5 |
| Dividend yield (%) | -- | -- | -- | -- |
| Net debt/EBITDA (X) | (6.3) | (2.4) | (2.3) | (2.4) |
| 12/23 | 3/24E | 6/24E | 9/24E | |
| EPS ($) | 2.73 | (0.49) | 0.77 | 0.96 |
| 12/23 | 12/24E | 12/25E | 12/26E | |
|---|---|---|---|---|
| P/E (X) | NM | 34.7 | 21.4 | 15.3 |
| EV/EBITDA (X) | -- | 13.9 | 9.3 | 6.6 |
| EV/sales (X) | -- | 0.9 | 0.8 | 0.7 |
| FCF yield (%) | NM | 2.8 | 5.2 | 6.5 |
| EV/DACF (X) | NM | 24.2 | 16.8 | 11.6 |
| CROCI (%) | 0.3 | 7.9 | 10.5 | 14.1 |
| ROE (%) | (8.4) | 12.6 | 19.6 | 27.3 |
| Net debt/EBITDA (X) | (6.3) | (2.4) | (2.3) | (2.4) |
| Net debt/equity (%) | (40.1) | (54.4) | (73.8) | (98.1) |
| Interest cover (X) | (3.9) | 67.8 | 111.3 | 155.8 |
| Inventory days | 103.6 | 106.7 | 103.4 | 98.5 |
| Receivable days | 76.8 | 77.7 | 70.5 | 69.7 |
| Days payable outstanding | 106.7 | 109.1 | 111.2 | 118.1 |
| 12/23 | 12/24E | 12/25E | 12/26E | |
|---|---|---|---|---|
| Total revenue growth | 12.1 | 4.3 | 5.8 | 1.8 |
| EBITDA growth | 152.6 | 286.4 | 40.2 | 29.4 |
| EPS growth | 71.3 | 232.8 | 61.9 | 39.8 |
| DPS growth | NM | NM | NM | NM |
| Gross margin | 14.4 | 18.2 | 19.4 | 21.1 |
| EBIT margin | (0.8) | 3.9 | 6.1 | 8.3 |
| 12/23 | 12/24E | 12/25E | 12/26E | |
|---|---|---|---|---|
| Total revenue | 33,239.0 | 34,673.1 | 36,693.0 | 37,357.9 |
| Cost of goods sold | (28,436.0) | (28,349.0) | (29,588.9) | (29,479.5) |
| SG&A | (4,552.0) | (4,415.2) | (4,282.7) | (4,154.2) |
| R&D | (896.0) | (934.7) | (989.1) | (1,007.0) |
| Other operating inc./(exp.) | 368.0 | 381.5 | 392.9 | 398.4 |
| EBITDA | 570.0 | 2,202.7 | 3,089.1 | 3,996.8 |
| Depreciation & amortization | (847.0) | (847.0) | (863.9) | (881.2) |
| EBIT | (277.0) | 1,355.7 | 2,225.1 | 3,115.6 |
| Net interest inc./(exp.) | (71.0) | (20.0) | (20.0) | (20.0) |
| Income/(loss) from associates | -- | -- | -- | -- |
| Pre-tax profit | (332.0) | 1,351.7 | 2,221.1 | 3,111.6 |
| Provision for taxes | (491.0) | (342.4) | (564.8) | (781.3) |
| Minority interest | 36.0 | 36.0 | 36.0 | 36.0 |
| Preferred dividends | -- | -- | -- | -- |
| Net inc. (pre-exceptionals) | (787.0) | 1,045.3 | 1,692.3 | 2,366.3 |
| Net inc. (post-exceptionals) | (1,070.0) | 1,045.3 | 1,692.3 | 2,366.3 |
| EPS (basic, pre-except) ($) | (2.87) | 3.84 | 6.22 | 8.70 |
| EPS (diluted, pre-except) ($) | (2.86) | 3.80 | 6.15 | 8.60 |
| EPS (ex-ESO exp., dil.) ($) | -- | -- | -- | -- |
| DPS ($) | -- | -- | -- | -- |
| Div. payout ratio (%) | 0.0 | 0.0 | 0.0 | 0.0 |
| Wtd avg shares out. (basic) (mn) | 274.3 | 272.0 | 272.0 | 272.0 |
| Wtd avg shares out. (diluted) (mn) | 275.0 | 275.0 | 275.0 | 275.0 |
| 12/23 | 12/24E | 12/25E | 12/26E | |
|---|---|---|---|---|
| Cash & cash equivalents | 3,597.0 | 5,333.2 | 7,199.3 | 9,535.5 |
| Accounts receivable | 7,485.0 | 7,281.3 | 6,898.3 | 7,359.5 |
| Inventory | 8,253.0 | 8,321.5 | 8,439.4 | 7,471.6 |
| Other current assets | 10,187.0 | 10,187.0 | 10,187.0 | 10,187.0 |
| Total current assets | 29,522.0 | 31,123.1 | 32,723.9 | 34,553.6 |
| Net PP&E | 5,251.0 | 5,406.8 | 5,537.8 | 5,669.9 |
| Net intangibles | 5,490.0 | 5,331.2 | 5,169.2 | 5,004.0 |
| Total investments | 2,341.0 | 2,341.0 | 2,341.0 | 2,341.0 |
| Other long-term assets | 4,590.0 | 4,590.0 | 4,590.0 | 4,590.0 |
| Total assets | 47,194.0 | 48,792.1 | 50,362.0 | 52,158.4 |
| Accounts payable | 8,276.0 | 8,668.3 | 9,356.7 | 9,713.0 |
| Short-term debt | -- | -- | -- | -- |
| Current lease liabilities | -- | -- | -- | -- |
| Other current liabilities | 21,154.0 | 21,063.5 | 21,326.1 | 21,412.5 |
| Total current liabilities | 29,430.0 | 29,731.8 | 30,682.8 | 31,125.6 |
| Long-term debt | -- | 100.0 | 100.0 | 100.0 |
| Non-current lease liabilities | -- | -- | -- | -- |
| Other long-term liabilities | 8,796.0 | 9,342.3 | 9,961.2 | 11,314.8 |
| Total long-term liabilities | 8,796.0 | 9,442.3 | 10,061.2 | 11,414.8 |
| Total liabilities | 38,226.0 | 39,174.1 | 40,744.0 | 42,540.4 |
| Preferred shares | -- | -- | -- | -- |
| Total common equity | 8,004.0 | 8,654.0 | 8,654.0 | 8,654.0 |
| Minority interest | 964.0 | 964.0 | 964.0 | 964.0 |
| Total liabilities & equity | 47,194.0 | 48,792.1 | 50,362.0 | 52,158.4 |
| BVPS ($) | 32.61 | 34.97 | 34.97 | 34.97 |
| 12/23 | 12/24E | 12/25E | 12/26E | |
|---|---|---|---|---|
| Net income | (474.0) | 1,045.3 | 1,692.3 | 2,366.3 |
| D&A add-back | 964.0 | 847.0 | 863.9 | 881.2 |
| Minority interest add-back | -- | -- | -- | -- |
| Net (inc)/dec working capital | 1,130.0 | 527.4 | 953.7 | 862.9 |
| Others | (434.0) | (642.4) | (864.8) | (981.3) |
| Cash flow from operations | 1,186.0 | 1,777.2 | 2,645.1 | 3,129.2 |
| Capital expenditures | (744.0) | (791.1) | (779.0) | (792.9) |
| Acquisitions | -- | -- | -- | -- |
| Divestitures | 60.0 | -- | -- | -- |
| Others | (50.0) | -- | -- | -- |
| Cash flow from investing | (734.0) | (791.1) | (779.0) | (792.9) |
| Dividends paid | -- | -- | -- | -- |
| Share issuance/(repurchase) | (361.0) | 650.0 | -- | -- |
| Inc/(dec) in debt | 16.0 | 100.0 | -- | -- |
| Others | (623.0) | -- | -- | -- |
| Cash flow from financing | (968.0) | 750.0 | 0.0 | 0.0 |
| Total cash flow | (516.0) | 1,736.2 | 1,866.1 | 2,336.2 |
| Free cash flow | 442.0 | 986.2 | 1,866.1 | 2,336.2 |
| Free cash flow per share (basic) ($) | 1.61 | 3.63 | 6.86 | 8.59 |
GE Vernova (GEV) is a global electric power (i.e., gas, wind, nuclear, hydro, solar) company that provides equipment/services to generate, transfer, convert and store electricity. The company has three reporting segments: Power, Wind and Electrification. GEV is a global business with operations in the US (38% of 2023 sales), Europe (25%), Asia (16%) and all other regions (21%). Below we highlight key segment details.
Power (52% of 2023 sales). Power is GEV's largest segment with a current TAM of ~$110bn. Within Power, Gas Power drives ~76% of sales with Services representing 68% of sales. The business operates as a razor/razor blade model with OEM sales generating a small profit and the lion's share driven by a long-tailed AM service stream. ~70% of contracts are > 10 years and retention rates are ~70%. 25% of GEV's Power installed base is currently under contract. Outside of Gas Power, Steam (14%), Nuclear (5%) and Hydro (5%) make up the rest of the segment. Note that GEV is currently in the process of exiting new build Steam, which represented ~9% of 2023 Power segment sales.
Wind (29% of 2023 sales). The Wind segment manufactures Onshore wind turbines (79% of sales), Offshore wind turbines and (15%) and blades (LM Wind) for the Wind industry (6%). Services currently account for ~15% of this segment. The current TAM for this segment is ~$85bn.
Electrification (19% of 2023 sales). The Electrification segment is comprised of Electrification Systems (86% of sales, with Grid Solutions contributing 62%) and Electrification Software (14%). GEV highlights this as its fastest growing segment with a current global TAM of ~$75bn. By 2025, GEV expects Electrification software to become ~$1bn business with ~50% recurring revenues. Software and services currently account for ~29% of this segment.
Company revenue, orders and RPO by segment 2023 ($ bn)
(1). RPO refers to remaining performance obligation and is a measure of the company's backlog.
Source: Company data, Goldman Sachs Global Investment Research
GEV's installed base of turbines (gas, steam, nuclear, hydro, wind, etc.) and aeroderivatives currently provide ~30% of the world's electricity. Going forward, the IEA believes electricity capacity will need to increase by 100% in order to meet stated policy and net zero commitments. This means that capacity investment in the next 20 years (12.5K GW) will likely be double the investment made in the previous 40 years (6K GW). Additionally, Gas Power, where GE has dominant share (~50%), is expected to remain a reliable source of baseload electricity at least through the end of the decade (~40% of electricity share in 2030, similar to today) and should grow with anticipated power generation investment (MSD CAGR). Government regulations to support decarbonization efforts (e.g., IRA, Green Deal, etc.) should bolster Onshore Wind growth in the coming years, particularly in the US where GE has market leading share. Lastly, while GEV's Electrification assets have historically been Europe centric, we believe GEV's advanced grid technologies will play a crucial role in modernizing, integrating and automating the grid going forward. Significant Electrification orders (>$10bn in Grid Solutions or B2B > 2.5x) in 2023 helps support GEV's position in this burgeoning market.
Global electricity generation (in TWh)
45K is stated policy objectives
Source: IEA, Company data, Goldman Sachs Global Investment Research
Power generation mix over time (GS Utilities team)
Source: Goldman Sachs Global Investment Research
The history of the Power business is complex. On one hand, the Power business operates in a razor/razor blade model with a long aftermarket tail that should provide stability in earnings/FCF going forward given that Services account for ~68% of Power revenues. However, history suggests otherwise as Power EBIT was extremely volatile over the past decade, with profit turning negative in 2018 after averaging > $5bn from 2008-2016. There are several reasons for the decline in performance, including a challenging Alstom integration (> $13bn acquisition in 2015 that resulted in a $23bn goodwill write down in 2018), underutilized assets ahead of a CEO transition in 2017 and changes in accounting practices (ASC 606) in 2018 that changed the way GE recognized long-term revenue/profits. After bottoming in 2018, the Power business has been in turnaround mode, and we've been encouraged by the progress, particularly in Gas Power, which turned profitable ahead of schedule in 2022 (by a year). In 2024, the entire Power business is expected to achieve double digit EBITDA margin, a milestone that didn't appear achievable a few years ago. The stories in Onshore Wind and Grid are not too dissimilar with Grid returning to profitability in 2022 (first time since 2018), and Onshore Wind returning to profitability starting 2H23). Offshore Wind is still a work-in-progress but the company is getting through unprofitable backlog faster-than-expected and there is line of sight to breakeven profitability by 2026.
GEV Power revenue mix (Service vs. Equipment)
Source: Company data, Goldman Sachs Global Investment Research
GEV Power EBIT ($ bn)
(1). We have stitched together estimates for GE Power segment from earlier models with pro forma GEV Power EBIT information from 2021-2023 and GS estimates post 2023.
Source: Company data, Goldman Sachs Global Investment Research
EBITDA margin for GEV Power segment
Source: Company data, Goldman Sachs Global Investment Research
GEV Wind segment EBITDA margin
Source: Company data, Goldman Sachs Global Investment Research
Despite all the progress made in the last few years, we believe there is still meaningful under-earning potential across the portfolio. Specifically, within Onshore Wind, the IRA drove > $10bn in orders in 2023 (B2B: > 1.3x) and this should start to ramp in 2H24 (guidance is for flat Wind growth in 2024). We believe consensus is under-estimating not just 2025 Onshore Wind organic growth (GS 2025 Onshore Wind growth: +8%) but also profitability as Onshore Wind (GS 2025 Onshore Wind margins: ~13%) should exit 2024 with at least low-teens margins. Electrification represents another large under-earning opportunity. Similar to Onshore Wind, Grid 2023 orders were > $10bn (B2B: > 2.5x) with Electrification backlog more than doubling ($13bn in 2024 vs. $6bn in 2023). Today, Electrification has MSD margins, but we believe the entitlement is higher, similar to peers like ABB/Hitachi/Siemens Energy's comparable segments (~22%/11%/10% 2023 EBITDA margins). Importantly, we expect 50% of 2023 ending backlog to ship in 2026 at much higher margins than today (GS 2026 Electrification margins: ~9%). Further, given most of the backlog is in Europe today, we believe there is a multi-year tailwind from US grid investment that is under-appreciated. As a result, our GEV 2025/2026 EBITDA is +12%/+9% and FCF is +23%/+13% vs. the Street.
Revenue, Orders and Book-to-bill by sub-segment for GEV Wind
Source: Company data, Goldman Sachs Global Investment Research
Sales growth for Onshore Wind
Source: Company data, Goldman Sachs Global Investment Research
EBITDA margin for GEV's Electrification segment vs. similar segment for peers (ABB, Hitachi, Siemens Energy)
Given ABB, Hitachi and Siemens Energy only had segment level EBITA estimates, we used the EBITA to EBITDA conversion at the company level (2%/4%/2.7% depreciation addback respectively)
Source: Visible Alpha Consensus Data, Company data, Goldman Sachs Global Investment Research
Electrification equipment backlog (LHS) and % 2023 backlog conversion by year (RHS)
Source: Company data, Goldman Sachs Global Investment Research
We initiate coverage of GEV with a $154, 12-month price target. Relative to peers, we believe GEV's sales and EBITDA growth will outpace peers in the coming years and the company should also generate strong FCF growth. While EBITDA margins are lower than peer average, Offshore Wind is still a headwind to earnings through 2025 and we believe investors should look out to 2026 when assessing the earnings power of the company. Lastly, GEV also has a solid balance sheet with a net cash position. All in, we ascribe a 13.0x Q5-Q8 EBITDA multiple (or ~10x implied 2026 multiple) to GEV which implies a FCF yield of ~4.5%/5.5% in 2025/2026. The 13x Q5-Q8 multiple implies a premium to peer average multiple to account for strong EBITDA growth profile of GEV (+91% 2023-2026E EBITDA growth vs. peer average +26%)
(1). Consensus estimates used for peers and GSe for Multis. Data last updated on April 15, 2024. (2). EBITDA CAGR of 2024-2026 used for Siemens Energy due to -ve EBITDA pre 2024.
Source: FactSet, Goldman Sachs Global Investment Research
Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.
We, Joe Ritchie, Vivek Srivastava and Aanvi Patodia, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs' Global Investment Research division.
The Goldman Sachs Factor Profile provides investment context for a stock by comparing key attributes to the market (i.e. our coverage universe) and its sector peers. The four key attributes depicted are: Growth, Financial Returns, Multiple (e.g. valuation) and Integrated (a composite of Growth, Financial Returns and Multiple). Growth, Financial Returns and Multiple are calculated by using normalized ranks for specific metrics for each stock. The normalized ranks for the metrics are then averaged and converted into percentiles for the relevant attribute. The precise calculation of each metric may vary depending on the fiscal year, industry and region, but the standard approach is as follows:
Growth is based on a stock's forward-looking sales growth, EBITDA growth and EPS growth (for financial stocks, only EPS and sales growth), with a higher percentile indicating a higher growth company. Financial Returns is based on a stock's forward-looking ROE, ROCE and CROCI (for financial stocks, only ROE), with a higher percentile indicating a company with higher financial returns. Multiple is based on a stock's forward-looking P/E, P/B, price/dividend (P/D), EV/EBITDA, EV/FCF and EV/Debt Adjusted Cash Flow (DACF) (for financial stocks, only P/E, P/B and P/D), with a higher percentile indicating a stock trading at a higher multiple. The Integrated percentile is calculated as the average of the Growth percentile, Financial Returns percentile and (100% - Multiple percentile).
Financial Returns and Multiple use the Goldman Sachs analyst forecasts at the fiscal year-end at least three quarters in the future. Growth uses inputs for the fiscal year at least seven quarters in the future compared with the year at least three quarters in the future (on a per-share basis for all metrics).
For a more detailed description of how we calculate the GS Factor Profile, please contact your GS representative.
Across our global coverage, we examine stocks using an M&A framework, considering both qualitative factors and quantitative factors (which may vary across sectors and regions) to incorporate the potential that certain companies could be acquired. We then assign a M&A rank as a means of scoring companies under our rated coverage from 1 to 3, with 1 representing high (30%-50%) probability of the company becoming an acquisition target, 2 representing medium (15%-30%) probability and 3 representing low (0%-15%) probability. For companies ranked 1 or 2, in line with our standard departmental guidelines we incorporate an M&A component into our target price. M&A rank of 3 is considered immaterial and therefore does not factor into our price target, and may or may not be discussed in research.
Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.
The rating(s) for GE Vernova is/are relative to the other companies in its/their coverage universe: ATS Corp., Allegion Plc, Cognex Corp., Core & Main Inc., Dover Corp., Eaton Corp., Flowserve Corp., GE Vernova, Graco Inc., Honeywell International Inc., ITT Inc., Illinois Tool Works, Ingersoll Rand Inc., Johnson Controls International Plc, Kennametal Inc., Lennox International Inc., Mirion Technologies Inc., Parker Hannifin Corp., RBC Bearings Inc., Regal Rexnord Corp., Rockwell Automation Inc., Roper Technologies Inc., Stanley Black & Decker Inc., Timken Co., Trane Technologies Plc, Vontier Corp., Zurn Elkay Water Solutions Corp., nVENT Electric Plc.
The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by Goldman Sachs Global Investment Research and referred to in this research.
Goldman Sachs has received compensation for investment banking services in the past 12 months: GE Vernova ($131.75)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: GE Vernova ($131.75)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: GE Vernova ($131.75)
Goldman Sachs makes a market in the securities or derivatives thereof: GE Vernova ($131.75)
Goldman Sachs Investment Research global Equity coverage universe
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As of April 1, 2024, Goldman Sachs Global Investment Research had investment ratings on 2,885 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by the FINRA Rules. See 'Ratings, Coverage universe and related definitions' below. The Investment Banking Relationships chart reflects the percentage of subject companies within each rating category for whom Goldman Sachs has provided investment banking services within the previous twelve months.
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Buy (B), Neutral (N), Sell (S) Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a stock's total return potential relative to its coverage universe. Any stock not assigned as a Buy or a Sell on an Investment List with an active rating (i.e., a stock that is not Rating Suspended, Not Rated, Coverage Suspended or Not Covered), is deemed Neutral. Each region manages Regional Conviction lists, which are selected from Buy rated stocks on the respective region's Investment lists and represent investment recommendations focused on the size of the total return potential and/or the likelihood of the realization of the return across their respective areas of coverage. The addition or removal of stocks from such Conviction lists are managed by the Investment Review Committee or other designated committee in each respective region and do not represent a change in the analysts’ investment rating for such stocks.
Total return potential represents the upside or downside differential between the current share price and the price target, including all paid or anticipated dividends, expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The total return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership.
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Not Rated (NR). The investment rating, target price and earnings estimates (where relevant) are not provided or have been suspended pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or in a strategic transaction involving this company, when there are legal, regulatory or policy constraints due to Goldman Sachs’ involvement in a transaction, when the company is an early-stage biotechnology company, and in certain other circumstances. Rating Suspended (RS). Goldman Sachs Research has suspended the investment rating and price target for this stock, because there is not a sufficient fundamental basis for determining an investment rating or target price. The previous investment rating and target price, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.
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