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Waukesha, Wisconsin-based Generac Holdings Inc. (GNRC) manufactures power generation equipment, energy storage systems and other power products including portable, residential, commercial and industrial generators. With a market cap of $9.3 billion, Generac’s operations span various countries in the Americas, Asia and Europe.
Companies worth $2 billion or more are generally described as "mid-cap stocks," Generac Holdings fits right into that category, with its market cap exceeding this threshold, reflecting its notable size and influence in the specialty industrial machinery industry. The company employs over 8,000 people worldwide.
The stock touched its two-year high of $195.94 on Nov. 11 and is currently trading 20.6% below that peak. GNRC has observed marginal gains over the past three months, outperforming the Industrial Select Sector SPDR Fund’s (XLI) 1.2% decline during the same time frame.
Over the longer term, Generac’s performance looks even more appealing. GNRC has surged 14.5% over the past six months and 19.5% over the past year, compared to XLI’s 9.4% gains over the past six months and 16.8% returns over the past 52 weeks.
To confirm the bullish trend and the recent downturn, GNRC has traded mostly above its 50-day and 200-day moving averages since mid-March with some fluctuations, before dropping below its 50-day moving average in recent weeks.
Generac Holdings stock prices observed a marginal gain after the release of its impressive Q3 results on Oct. 31. While the company observed softness in its commercial & industrial product sales, its residential products sales surged nearly 28% year-over-year to $723 million due to an increase in power outages leading to high demand for its home standby and portable generators. Its overall net sales increased 9.6% compared to the year-ago quarter to $1.2 billion.
Meanwhile, the company also observed a substantial growth in profitability. Generac’s strong execution led to a massive 514 basis point gross margin expansion to 40.2% and a 25.7% growth in gross profit to $472.3 million. Furthermore, its adjusted EPS surged nearly 37.2% year-over-year to $2.25, exceeding analysts’ estimates by a staggering 13.6%.
Generac Holdings notably underperformed its peer Cummins Inc.’s (CMI) 25.2% gains over the past six months and 46.4% returns over the past year.
Among the 26 analysts covering the GNRC stock, the consensus rating is a “Moderate Buy.” Its mean price target of $179.13 represents a 15.1% premium to current price levels.
