) is a Zacks #1 Rank (Strong Buy) due to its solid history of
positive earnings surprises. Its recent pull back makes it
attractive to aggressive growth investors.
Generac is a manufacturer of backup power generation products
serving residential, light commercial and industrial markets. The
Company designs, engineers, manufactures, and markets a range of
automatic, stationary standby and portable generators. Generac's
power systems range in output from 800 watts to 9 megawatts and are
available through a broad network of independent and industrial
dealers, retailers and wholesalers.
Strong Earnings Surprise
GNRC recently had a very strong quarter. The company reported
earnings of $0.76 per share, more than $0.15 or 24% ahead of the
Zacks Consensus Estimate. Revenue for the quarter was $267 million,
19% ahead of expectations and up from $161 million in the year ago
This comes on the heels of the September quarter where the company
reported earnings of $0.75 per share, about 19% or $0.12 better
than the Zacks Consensus Estimates. Revenue had a similar surprise,
coming in 12% ahead of expectations and 48% ahead of the year ago
Six Beats and One Miss
Generac has posted six beats and one miss in its last seven
earnings reports. The lone miss was in the March 2011 quarter and
the stock moved lower by 2.5% as a result. The six other quarter
have seen beats on the bottom line as small as 13% and as large as
The most recent beat of 24% resulted in the stock moving lower by
14%, a move that some point to being caused by a typo in a sell
side analysts report.
GNRC trades in line or at a discount to the industry average on
most metrics. A slight discount is found in both the trailing and
forward PE, with a very palatable 9.9x multiple for GNRC being
bested by the 10.7x industry average. Price to book also shows GNRC
trading slightly below the industry average. The only metric that
show GNRC at a premium is price to sales.
A quick look at the chart shows the significant sell off following
the most recent earnings report. After a small bounce, the stock
has once again faded lower. This sets up nicely for aggressive
growth stock investors as the company has a solid history of large
earnings surprises, sold off recently and has a low valuation. GNRC
is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
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