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On Wednesday, Jefferies reiterated its Underperform rating on Generac Holdings (NYSE:GNRC) with a steady price target of $140.00. The firm’s assessment follows Generac’s recent earnings report, which exceeded consensus estimates due to a strong margin performance and favorable items impacting the bottom line. According to InvestingPro data, Generac maintains a healthy financial position with a current ratio of 2.03, indicating strong liquidity. The company saw robust growth in residential products, driven by high demand for home standby (HSB) and portable generators amid increased outage activity in the second half of 2024. InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model, with analysts setting price targets ranging from $94 to $210.Want deeper insights? InvestingPro subscribers have access to 8 additional key tips about Generac’s financial health and growth prospects, along with comprehensive valuation metrics.
Generac introduced its 2025 guidance, projecting sales growth of 3-7%, which translates to approximately $4.5 billion, slightly below the consensus estimate of around $4.6 billion. The company anticipates an EBITDA of approximately $835 million, based on margin expectations of 18-19%, which is less than the consensus projection of $877 million. The guidance reflects growth in residential products, with flat sales expected in commercial and industrial (C&I) products. The forecast includes the impact of completed acquisitions and a slight unfavorable effect from foreign exchange (FX) movements. Free cash flow (FCF) conversion is expected to range between 80-90%.
For the fourth quarter of 2024, Generac posted adjusted earnings of $2.80 per share, surpassing the consensus of $2.53 per share. The company benefited from stronger margin performance, reduced interest expenses, and other favorable factors. Domestic sales saw a 20% year-over-year increase, with significant growth in HSB and portable generator shipments. The company also experienced higher shipments of residential energy storage systems and ecobee products. Despite these gains, international sales fell by 3% year-over-year, affected by FX headwinds and challenges in some European markets, although this was partly offset by strength in Latin America. InvestingPro’s detailed analysis shows the company maintains a healthy gross profit margin of 37.65% and an impressive Piotroski Score of 8, indicating strong financial health.Access the comprehensive Pro Research Report for Generac, along with 1,400+ other top stocks, exclusively on InvestingPro.
By product type, residential sales surged by 28%, while commercial and industrial sales remained roughly flat compared to the previous year. Other product sales increased by 6%. Gross profit margins improved to 40.6%, up 406 basis points year-over-year, bolstered by a favorable sales mix and lower input costs. Adjusted EBITDA margin expanded by 150 basis points year-over-year, with both domestic and international segments contributing to the margin growth. This performance aligns with InvestingPro’s analysis showing strong cash returns on invested capital of 15% and a healthy return on equity of 12%.
In other recent news, Generac Holdings has been under the lens of several financial firms. Stifel analysts reaffirmed their Buy rating on Generac, maintaining a steady price target of $210. They expressed confidence in the company’s ability to navigate through the challenges presented by the Trump Administration’s energy policies, the ongoing impact of tariffs, and the effects of the "Deepseek" phenomenon on data center demand.
Meanwhile, KeyBanc analyst Jeffrey Hammond maintained a Sector Weight rating for Generac. Hammond suggested a more conservative outlook for 2025, citing limited visibility in Residential Home Standby and inconsistent Commercial & Industrial trends.
On the other hand, Barclays (LON:BARC) initiated coverage on Generac with an Equalweight rating and a price target of $189, indicating the company’s current market position and growth prospects. The firm recognized Generac’s low market penetration yet high market share in the backup power industry.
These recent developments follow the company’s stock rise due to wildfires in Los Angeles, which typically increases demand for Generac’s power generation equipment and energy storage solutions. Remember, these are recent developments and not predictions or speculations about Generac’s future.
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