Generac Holdings Inc GNRC will report fourth-quarter 2024 results on Feb. 12, before market open.
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The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.23 billion, up 15.7% from the prior-year reported number. The Zacks Consensus Estimate for earnings is pegged at $2.50 per share, up 20.8% year over year. The estimate has remained unchanged in the past 60 days.
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GNRC beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average earnings surprise of 10.83%. In the past year, shares of the company have gained 8.9% compared with the Manufacturing-General Industrial industry’s growth of 8.2%.
Factors Shaping Upcoming Results for GNRC
Generac’s fourth-quarter performance is likely to have been boosted by a surge in demand for home standby generators amid increasing power outage activity caused by hurricanes. Demand for portable generators is also likely to have witnessed an upsurge owing to extreme weather.
GNRC has been focusing on boosting production rates for home standby generators to meet higher demand. Owing to investments in production capacity, GNRC targeted shipping $200 million of incremental home standby and portable generators in 2024, related to the impact of the major hurricanes in the second half of the year.
Ecobee has been gaining momentum in the smart thermostat market, owing to the expansion of partnerships with important retail partners. Healthy adoption of Ecobee products is expected to have contributed to GNRC’s top-line expansion in the to-be-reported quarter. The introduction of the PWRcell 2 Series is also likely to have driven revenues from the residential energy technology products and solutions portfolio. Synergies from acquisitions are another tailwind.
Margin performance is likely to have been buoyed by a favorable sales mix (due to solid home standby shipments), enhanced production efficiencies and reduced input costs.
Generac has raised its revenue outlook for 2024 based on the heightened demand owing to recent power outage activity. For 2024, it now expects revenues to increase 5-9% compared with the earlier guidance of 4-8%. Residential revenues are now forecasted to increase in the high-teens percentage range compared with prior expectations for mid-teens increase. Overall, revenues from residential products are expected to improve $100 million in 2024.
Generac Holdings Inc. Price and EPS Surprise
Generac Holdings Inc. Price and EPS Surprise
Generac Holdings Inc. price-eps-surprise | Generac Holdings Inc. Quote
The gross margin for 2024 is now expected to improve 450 basis points (bps) compared with 2023. For the fourth quarter, the gross margin is expected to be similar as the third quarter. Free cash flow is expected to be $500 million in 2024. Net income margin (before deducting for non-controlling interests) is now anticipated between 7% and 8% compared with the earlier guided range of 6.5-7.5%. Adjusted EBITDA margin is estimated to be 17.5-18.5% compared with the previous guidance of 17-18%.
Weakness in Commercial & Industrial (“C&I”) sales remains concerning. Management expects C&I and other product sales to be approximately $50 million below its previous outlook, owing to soft market conditions in certain domestic regions as well as in Europe. C&I product sales are now predicted to be down high single digits year over year in 2024. The other sales category is forecasted to be nearly flat on a year-over-year basis for 2024.
Volatile macroeconomic conditions, stiff competition, along with increasing operating costs (mainly due to higher marketing spending and research and development expenses) remain concerning for Generac.
The Zacks Consensus Estimate for Residential products' revenues is pegged at $771 million, up 32.9% year over year. The Zacks Consensus Estimate for C&I products' revenues is pegged at $341 million, down 6.1% year over year.
GNRC’s Key Recent Developments
On Jan. 22, 2025, Generac unveiled its newest home standby generator design, featuring the 28kW model, the most powerful air-cooled standby generator on the market. This launch broadens Generac’s range of reliable and efficient air-cooled generators, offering options from 10kW to 28kW. The new models are designed to work seamlessly with other Generac products, such as ecobee smart thermostats and PWRcell battery systems, providing a complete home energy solution.
On Jan. 6, 2025, Generac’s ecobee launched the Smart Thermostat Essential, a budget-friendly option that maintains the brand's hallmark comfort and convenience. Featuring a sleek full-color touchscreen, this new device is easy to install, simple to use and offers substantial savings.
What Does Our Model Predict About GNRC?
Our proven model does not predict an earnings beat for Generac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
Generac has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With Favorable Combination
Here are a few stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season.
Watsco, Inc. WSO currently has an Earnings ESP of +0.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
WSO is scheduled to report quarterly earnings on Feb.18. The Zacks Consensus Estimate for WSO to-be-reported quarter’s earnings and revenues is pegged at $2.13 per share and $1.65 billion, respectively. Shares of WSO have gained 13.4% in the past year.
Community Health Systems, Inc. CYH presently has an Earnings ESP of +29.63% and a Zacks Rank #2. CYH is scheduled to report quarterly numbers on Feb. 18. The Zacks Consensus Estimate for CYH’s to-be-reported quarter’s earnings and revenues is pegged at 5 cents per share and $3.16 billion, respectively. Shares of CYH have lost 17.5% in the past year.
Comstock Resources, Inc. CRK has an Earnings ESP of +12.50% and a Zacks Rank #2 at present. CRK is scheduled to report quarterly figures on Feb. 18. The Zacks Consensus Estimate for CRK’s to-be-reported quarter’s earnings and revenues is pegged at 2 cents per share and $373.9 million, respectively. Shares of CRK have increased 124.7% in the past year.
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