Generac Earnings Jump 71% Amid Strong Demand For Backup Power

Power-backup systems maker Generac (GNRC) reported stronger-than-expected second-quarter earnings early Wednesday, as demand picks up amid wildfires, hurricanes and other disasters. Generac stock sank.


Generac Earnings

Estimates: FactSet consensus was for Generac earnings per share of $2.31, 65% above the year-ago quarter, with sales up 59% to $867 million.

Results: Generac earnings per share leapt 71% to $2.39 a share. Revenue climbed 68% to $900 million.

Outlook: Generac raised its full-year sales growth guidance to 47%-50% from 40%-45%. But it lowered the top end of its EBITDA margin forecast to 24.5%-25% from 24.5%-25.5%.

During the quarter, Wisconsin-based Generac also expanded its footprint in solar energy power generation and storage.

On July 6, the company said it bought Chilicon Power, a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. California-based Chilicon’s power inversion and monitoring technology maximizes PV production, lowers installation costs and allows for easy integration of a battery or a generator, providing tremendous flexibility for installers and end-users, Generac said in a statement.

Generac Stock

Shares fell 11.6% to 387.80 on the stock market today. Generac stock is still well extended past a buy point from a double-bottom base after triggering the eight-week-hold rule. The stock is in profit-taking zone, according to MarketSmith chart analysis.

The Leaderboard stock is in a fourth-stage base. Such late-stage bases are less likely to succeed. However, Generac’s relative strength line is trending upward and hit an all-time high in recent weeks. Still, the stock may be due for a breather.

Meanwhile, Generac’s RS Rating is 96 out of a possible 99. Its EPS Rating is 97, since it’s posted four straight quarters of earnings growth.

With a top-notch Composite Rating of 99, Generac leads IBD’s electrical-power/equipment group with a top-notch Composite Rating of 99. The group itself ranks No. 35 out of 197 industry groups.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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