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With today's spinoff of its power and renewable energy businesses, General Electric's (GE) massive transformation plan that began three years ago is now complete, resulting in three separate companies: GE Aerospace (GE), GE Vernova (GEV), and GE HealthCare (GEHC), which was spun-off in January 2023.

• CEO Larry Culp, who will now head up GE Aerospace, envisioned a streamlined aerospace business that was free to fully capitalize on the resurgence of the commercial airline industry and the rise in defense budgets around the world. That vision has already paid huge dividends to the tune of an 84% yr/yr gain in GE shares, fueled by strengthening financial results due to robust demand in the aviation segment and a recovery in the power and energy segments.
• Those power and energy segments are now known as GE Verona and officially began trading today under the "GEV" ticker symbol. As expected, GEV has been well received by investors with shares trading higher, exhibiting notable relative strength in a weak tape. While the aerospace segment has received most of the accolades for GE's vastly improved financials, the power and renewable energy businesses have experienced a meaningful turnaround and momentum is building.
• Aided by the passage of the Inflation Reduction Act in August of 2022, demand for wind turbines has rebounded. In Q4, renewable energy generated revenue growth of 14%, while its operating loss shrunk to ($317) mln from ($934) mln in the year-earlier quarter.
• Meanwhile, the power segment, which manufactures and services gas turbines that generate energy, is also on the upswing, driven by services and higher equipment orders for heavy-duty gas turbines. Revenue increased by 12% in Q4, while profit was over $750 mln with segment margin of 13.1%.
• The future looks bright for both GE and GEV. On March 7, GE hosted a presentation ahead of the spinoff, reaffirming FY24 revenue guidance of $34-$35 bln for GEV while forecasting mid-single-digit organic revenue growth and 10% EBITDA margin by 2028. GE also reaffirmed its FY24 revenue guidance, forecasting low-double-digit growth (or more) and operating profit of $6.0-$6.5 bln. Looking further out, GE expects a high-single-digit CAGR for revenue in 2025-2028 with operating profit of approximately $10.0 bln.

Overall, the breakup of GE, which was once an iconic industrial conglomerate, was a bold move, but it's also been a clear success. Separating each business has unlocked the value in each of those businesses, enabling them to create a growth strategy that's specifically tailored to capitalize on individual underlying trends.