Generac (NYSE:GNRC) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Generac Holdings Inc. (NYSE:GNRC) is scheduled to report Q3 earnings results before markets open for trading on October 28, 2020.

The company is expected to report earnings of $1.71/share on revenue of $678 million. The consensus earnings per share (EPS) of $1.71/share is based on a poll of 14 analysts and represents a growth in eps of 19.6% over the same quarter last year, when the company reported earnings of $1.43/share.

The revenue forecast of $678 million based on a poll of 15 analysts implies a year-over-year (YoY) growth in revenue of 12.8%. Last year the company reported $601.1 million in revenue for the quarter.

Expected to report EPS growth of 19.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $678.00 $601.13 12.8%
EPS $1.71 $1.43 19.6%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Generac Holdings Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.89 $1.40 57.8% Beat
Q1, 2020 $0.80 $0.87 8.3% Beat
Q4, 2019 $1.37 $1.53 11.9% Beat
Q3, 2019 $1.33 $1.43 7.3% Beat
Q2, 2019 $1.08 $1.20 10.6% Beat
Q1, 2019 $0.78 $0.91 17.4% Beat
Q4, 2018 $1.39 $1.42 2.2% Beat
Q3, 2018 $1.08 $1.43 32.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 12.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $139.73 $157.58 12.8% Increase
April 30, 2020 $103.68 $93.29 −10.0% Decline
February 13, 2020 $113.72 $113.26 −0.4% Decline
October 31, 2019 $92.67 $91.80 −0.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.86, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.86 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Generac Holdings Inc. is currently trading at $210.40/share, down −0.8% for the day. The company is trading at approximately 97.4% of its 52-week high of $215.98/share. The company’s stock price is up 33.5% since the last earnings report and down −0.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 63.55 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:GNRC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 52.37 and a forward P/E multiple of 36.02.

Generac Holdings Inc.’s current share price also implies a price-to-book (P/B) multiple of 12.03. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $210.40
P/E Ratio 52.4x
P/E Ratio (Fwd) 36.0x
PEG Ratio −39.3
Total Debt / Total Capital 6.9%
Levered Free Cash Flow $346.6 million
EV / EBITDA 31.9x

Finbox

Generac Holdings Inc. is a large-cap stock with a market capitalization of $13.211 billion and a total enterprise value of $13.87 billion. The company operates in the Industrials sector and the Electrical Equipment industry.

Generac Holdings Inc. designs, manufactures, and sells power generation equipment, energy storage systems, and other power products for the residential, and light commercial and industrial markets worldwide. The company offers engines, alternators, transfer switches, and other components fueled by natural gas, liquid propane, gasoline, diesel, and bi-fuel; and batteries and inverters. It also provides residential automatic standby generators ranging in output from 6kW to 60kW; air-cooled engine residential standby generators ranging from 6kW to 22kW; liquid-cooled engine generators with outputs ranging from 22kW to 150kW; Mobile Link, a remote monitoring system for home standby generators; and industrial diesel generators ranging in sizes up to 3,250kW. In addition, the company offers various portable generators ranging in size from 800W to 17.5kW; engine driven power washers; water pumps; outdoor power equipment, such as trimmers and brush mowers, log splitters, lawn and leaf vacuums, and chipper shredders; and clean energy solution under the PWRcell and PWRview brands. Further, it provides light towers, mobile generators, and flameless heaters; light-commercial standby generators ranging from 22kW to 150kW and related transfer switches providing three-phase power for small and mid-sized businesses; and industrial generators ranging in output from 10kW up to 3,250kW used as emergency backup for healthcare, telecom, datacom, commercial office, retail, municipal, and manufacturing markets. Additionally, the company sells aftermarket service parts and product accessories to dealers. It distributes its products through independent residential dealers, industrial distributors and dealers, national and regional retailers, e-commerce partners, electrical, HVAC and solar wholesalers, catalogs, equipment rental companies and distributors, and solar installers; and directly to end users. Generac Holdings Inc. was founded in 1959 and is headquartered in Waukesha, Wisconsin.

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