Generac Holdings Inc GNRC performance is benefiting from robust demand for Residential and Commercial & Industrial (C&I) products and strengthening end-market activity across most of the regions. The company recently reported better-than-expected second-quarter 2022 results.
Generac reported adjusted earnings of $2.99 per share, which beat the Zacks Consensus Estimate by 12.8%. Also, the bottom line increased 25.1% year over year. Net sales increased 40% year over year and came in at $1.29 billion, beating the consensus mark by 2.4%. Robust demand for Residential and C&I products boosted Generac’s second-quarter performance. Core sales growth (excluding the impact of acquisitions and foreign currency) increased 33% year over year.
For 2022, Generac expects revenue growth between 36% and 40%, unchanged from the previous guidance. This includes a net impact of between 5% and 7% from acquisitions and foreign currency changes. The net income margin (before deducting for non-controlling interests) is expected to be 13-14%. The adjusted EBITDA margin is estimated in the range of 21.5-22.5%.
Generac outpaced estimates in three of the trailing four quarters, delivering an earnings surprise of 6.7%, on average.
Amid the ongoing volatility, the stock has been more resilient compared with the Zacks sub-industry it belongs to. The stock has gained 41.1% in the past two-year period compared with the industry’s decline of 3.8%.
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The company has a robust share repurchase plan in place. In the quarter under review, the company repurchased shares worth $124 million, thereby exhausting its existing share buyback authorization. On Jul 29, 2022, the company announced a new stock repurchase program for $500 million, expanding over 24 months.
Headquartered in Waukesha, WI, Generac is a leading manufacturer of power generation equipment, energy storage systems and other power products, including portable, residential, commercial and industrial generators. The company’s product portfolio also comprises engines, alternators, transfer switches, mobile heaters, power washers, water pumps, energy monitoring devices and other components of outdoor power equipment for residential and commercial use.
Generac is gaining from continued capacity expansion efforts and a robust demand environment for home standby generators, PWRcell energy storage systems, clean energy products and C&I products globally. Demand for home standby generators is benefiting from increasing power outages and broader electrification trends. C&I sales gained from increasing demand in the rental equipment and telecom channels.
Realization of previously-announced price increases and cost reduction projects are expected to increase margins. Robust demand for combined clean energy products and synergies from acquisitions are tailwinds.
However, macroeconomic uncertainty and higher input costs related to supply-chain woes are likely to remain a concern in the near term for this Zacks Rank #3 (Hold) stock.
Stocks to Consider
Some better-ranked stocks from the broader technology sector worth consideration are Arista Networks ANET, Intuit INTU and Badger Meter BMI. Arista Networks and Badger Meter sport a Zacks Rank #1 (Strong Buy), while Intuit carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, the average being 12.6%. Shares of BMI have gained 0.7% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $3.99 per share, up 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 41.2% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2022 earnings is pegged at $11.72 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 15.6%.
Intuit’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 16.8%. Shares of INTU have lost 11.7% in the past year.
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