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Wisconsin-based Generac Holdings Inc. (GNRC) designs, manufactures and distributes various energy technology products and solutions. Valued at a market cap of $10.7 billion, the company’s product includes engines, alternators, transfer switches, mobile heaters, water pumps, energy monitoring devices, and other components of outdoor power equipment for residential and commercial use.
Shares of this power company have significantly outpaced the broader market over the past 52 weeks. GNRC has soared 62.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31.1%. Moreover, on a YTD basis, the stock is up 42%, compared to the SPX’s 24.7% gain.
Narrowing the focus, GNRC’s outperformance looks even more pronounced when compared to the Industrial Select Sector SPDR Fund’s (XLI) 32.9% gain over the past 52 weeks and 23.4% return on a YTD basis.
GNRC’s outperformance was primarily aided by the growing need for backup power products, fueled by elevated outage activity and growing grid-related supply-demand imbalances. Shares of GNRC increased for several consecutive trading sessions after its impressive Q3 earnings release on Oct. 31. Its adjusted earnings of $2.25 per share surpassed the Wall Street estimates of $1.98 and climbed 37.2% from a year ago.
Its revenue also increased 9.3% year-over-year to $1.17 billion and outpaced the consensus estimates of $1.16 billion. Strong demand for home standby and portable generators, elevated power outage activity coupled with a favorable sales mix, and improved production efficiency contributed to its robust performance. The company’s raised revenue for the full year 2024 and net margin guidance might have further enhanced investor confidence.
For the current fiscal year, ending in December, analysts expect GNRC’s EPS to grow 25.9% year over year to $6.80. The company’s earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 25 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 12 “Strong Buy,” one “Moderate Buy,” nine “Hold,” one “Moderate Sell,” and two “Strong Sell” ratings.
The configuration is slightly less bullish than three months ago, with 13 analysts suggesting a “Strong Buy.”
On Nov. 19, Stifel maintained a “Buy” rating on Generac and raised its price target to $210 - The Street-high price target, which indicates a 14.4% potential upside from the current levels.
As of writing, the company is trading above its mean price target of $177.50.
