Does Generac Holdings Have More Upside Potential?  

NYSE: GNRC | Generac Holdlings Inc.  News, Ratings, and Charts

GNRC – Generac Holdings (GNRC) has been one of the best-performing stocks. The electricity problems in Texas due to the cold weather are another catalyst for the stock. Patrick Ryan gives his take on whether the stock is a buy.

Generac Holdings (GNRC), a designer and maker of all sorts of helpful generators and products powered by engines, has been on a tear across the past year. The company’s generators and other products are selling like hotcakes, largely because of the pandemic and general anxiety during this time.

GNRC was trading at $111 a year ago. Today, the stock is trading at $351. The stock was trading at $246 less than three weeks ago.

Will GNRC continue to move even higher? Will the stock suffer as a result of seemingly inevitable profit-taking? Let’s find out.

The Case for GNRC

GNRC’s meteoric rise across the past year is largely attributable to the increase in demand for generators. This demand will increase even more in the weeks and months ahead following the historic snowstorm that blanketed the south with several inches of snow, knocking out power throughout much of the Lone Star State in the process.

However, GNRC’s blowout fourth-quarter earnings also played an important role in the stock’s recent ascension. GNRC’s quarterly net income posted at $125 million, equating to $1.97 per share as compared to the $1.12 and $69.6 million per share in the same quarter one year ago. Elevated operating income is responsible for this significant hike. The company’s quarterly net income came in at $350.6 million, equating to $5.48 per share as compared to the $252 million and $4.03 per share in the same quarter a year ago.

GNRC’s quarterly adjusted net income posted at $135.7 million, equating to $2.12 per share as compared to the $96.5 million and $1.53 in these respective metrics from the same quarter in the year prior. GRNC’s quarterly revenue was particularly strong, coming in at $761.1 million as compared to the $590 million posted in the quarter one year ago. Heightened demand for GNRC’s residential products is credited for the spike in revenue. The only question is whether the demand for GNRC’s home standby generators will level off at some point in the year ahead. All in all, GNRC’s bottom line surpassed analyst estimates by 16 cents for the quarter.

Though GNRC’s international revenue declined more than 4% for the quarter, its domestic revenue increased by more than 37% across the year. If you are curious as to GNRC’s revenue diversity, you are not alone. It is interesting to note GNRC’s residential product revenues increased 54.6%, coming in at just under $499 million. Revenue stemming from GNRC’s C&I products came in at $198.6 million, a decrease from the $217 million in the same quarter one year ago. Additional revenue from other product classes posted at $63.8 million, an increase of more than 24%.

What are the Analysts Saying About GNRC?

More analysts cover GNRC than nearly 80% of the rest of the publicly traded companies in the Industrials segment. All in all, a dozen analysts have studied GNRC. Though the highest price target for the stock is $310, GNRC is still worth considering as an addition to your portfolio at its current trading price. GNRC has a forward P/E ratio of 43.57 even though it is trading only $13 away from its 52-week high of $360.18. This means GNRC still might have some runway for an even higher ascent in the weeks and months ahead.

GNRC’s POWR Ratings

GNRC has an A grade in the Quality, Momentum, and Growth components of the POWR Ratings. The stock also has a B grade in the Sentiment POWR Ratings component. If you are curious as to how GNRC fares in terms of the Value and Stability components, click here to find out more about the stock’s POWR Ratings performance.

Of the nearly 90 publicly traded companies in the Industrial – Machinery industry, GNRC is ranked 28th. You can find out more about the Industrial-Machinery sector’s stocks by clicking here.

Does Upside Potential Remain?

Yes. GNRC ‘s brass insists revenue has the potential to grow in the range of 25% and 30% on a year over year basis. GNRC executives also predict the company’s net income margin will be around 15% for the year ahead. GNRC is clearly deserving of a place in your portfolio.

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GNRC shares were trading at $346.59 per share on Thursday morning, down $8.73 (-2.46%). Year-to-date, GNRC has gained 52.41%, versus a 3.77% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


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