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1. Company Snapshot

1.a. Company Description

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, batteries, electronic controls, steel enclosures, and other components.


It also provides residential automatic standby generators ranging in output from 7.5kW to 150kW; air-cooled engine residential standby generators ranging from 7.5kW to 26kW; liquid-cooled engine generators with outputs ranging from 22kW to 150kW; and Mobile Link, a remote monitoring system for home standby generators.In addition, the company offers various portable generators ranging in size from 800W to 17.5kW; outdoor power equipment, such as trimmers, field and brush mowers, log splitters, stump grinders, chipper shredders, lawn and leaf vacuums, pressure washers, and water pumps; and clean energy solution under the PWRcell and PWRview brands.Further, it provides light towers, mobile generators, and mobile energy storage systems; commercial mobile pumps and dust-suppression equipment; various gaseous-engine control systems and accessories; 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 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.The company was founded in 1959 and is headquartered in Waukesha, Wisconsin.

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1.b. Last Insights on GNRC

Generac Holdings Inc.'s recent performance was negatively impacted by weaker-than-expected Q3 earnings and revenues, which missed estimates. The company's revenue outlook for 2025 was also revised downward due to muted demand for home generators. Additionally, several institutional investors, including Nisa Investment Advisors LLC, Bessemer Group Inc., and IFP Advisors Inc., reduced their stakes in the company. However, some analysts highlight underappreciated reasons to invest in Generac, citing potential for expanding EBITDA margins and high-margin recurring revenue.

1.c. Company Highlights

2. Generac's Q3 2025 Earnings: A Mixed Bag

Generac Holdings Inc.'s third-quarter 2025 net sales decreased 5% to $1.11 billion, with residential product sales declining 13% to $627 million due to a lower power outage environment and a strong prior year period. The company's gross profit margin was 38.3%, down from 40.2% in the prior year, primarily due to unfavorable sales mix and higher tariffs. Adjusted EBITDA was $193 million or 17.3% of net sales, compared to $232 million or 19.8% in the prior year. Diluted net income per share was $1.12, compared to $1.89 in the prior year, while adjusted net income was $108 million, or $1.83 per share, compared to $136 million, or $2.25 per share, in the prior year.

Publication Date: Nov -03

📋 Highlights
  • Net Sales Decline: Q3 2025 net sales fell 5% to $1.11B, with residential sales down 13% to $627M versus C&I sales up 9% to $358M.
  • Data Center Backlog Surge: Large megawatt generator backlog doubled to $300M over 90 days, targeting $500M+ capacity for 2026.
  • Gross Margin Compression: Gross profit margin dropped to 38.3% (vs. 40.2% prior year) due to mix shift and higher tariffs, with EBITDA falling to 17.3% of sales.
  • 2025 Outlook Adjusted: Sales expected flat YoY, residential down mid-single digits, C&I up mid-single digits, with margin guidance at ~17% EBITDA.
  • Capacity Expansion Plans: $300M data center backlog to drive 3-5 year capacity doubling, including facility expansions and M&A, targeting $1.5–$2M ASP per generator.

Segment Performance

The company's commercial and industrial product sales increased 9% to $358 million, driven by growth in domestic telecom customers and initial shipments of large megawatt generators to data center customers. International sales increased 11%, driven by strength in C&I product shipments in Europe and Australia. The company's backlog for large megawatt generators for data center customers doubled to over $300 million in the last 90 days.

Outlook and Guidance

The company updated its 2025 outlook, expecting consolidated net sales to be approximately flat compared to the prior year, with residential product sales declining in the mid-single-digit percent range, while C&I product sales are expected to increase in the mid-single-digit percent range. For 2026, the company expects growth in residential products, driven by a return to normal baseline outages, easy comps, and a growing dealer base. The C&I segment has a strong backlog, and the company thinks it can grow that business significantly in 2026.

Data Center Opportunity

The data center market opportunity is seen as a unique and generational chance for the company, with a structural deficit in the supply of backup power. The company has a $300 million backlog, with most of it slated for 2026 shipping, and sees potential for $500 million or more in capacity for 2026. As Aaron Jagdfeld mentioned, "the company is optimistic about its chances to get added to the approved vendor list for hyperscalers and is aggressively investing in capacity expansion."

Valuation

With a P/E Ratio of 31.47 and an EV/EBITDA of 29.26, the market is pricing in significant growth expectations. The company's ROE is 12.3%, and ROIC is 8.96%. The actual EPS of $1.83 was lower than estimates of $2.25, which may impact investor sentiment. Analysts estimate next year's revenue growth at 11.0%, which will be crucial in justifying the current valuation.

3. NewsRoom

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Franklin Resources Inc. Decreases Stock Holdings in Generac Holdings Inc. $GNRC

Dec -01

Source: defenseworld.net

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As Cold Weather Looms, Generac Urges Homeowners to Prepare for Power Outages

Nov -11

Source: prnewswire.com

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Generac CEO: 'Amazing' how quickly backlog is growing for data centers

Nov -10

Source: youtube.com

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AI's Power Crisis - And The Surprising Winners I Never Expected

Nov -04

Source: seekingalpha.com

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Generac Holdings Inc. $GNRC Position Reduced by Nisa Investment Advisors LLC

Nov -04

Source: defenseworld.net

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Bessemer Group Inc. Sells 3,813 Shares of Generac Holdings Inc. $GNRC

Nov -03

Source: defenseworld.net

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AlphaQuest LLC Grows Stock Position in Generac Holdings Inc. $GNRC

Oct -30

Source: defenseworld.net

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Generac Holdings Inc. (GNRC) Q3 2025 Earnings Call Transcript

Oct -29

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.60%)

6. Segments

Residential Products

Expected Growth: 8%

Residential Products from Generac Holdings Inc. growth driven by increasing demand for backup power solutions, rising adoption of solar and energy storage systems, and growing need for grid resilience. Additionally, expanding product offerings, strategic partnerships, and investments in digital technologies contribute to the 8% growth.

Commercial & Industrial Products

Expected Growth: 9%

Generac Holdings Inc.'s Commercial & Industrial Products segment growth of 9% is driven by increasing demand for backup power systems, rising adoption of renewable energy sources, and growing need for grid resiliency. Additionally, expansion into new markets, product innovation, and strategic acquisitions are contributing to the segment's growth.

Other

Expected Growth: 10%

Generac Holdings Inc.'s 'Other' segment growth is driven by increasing demand for energy storage systems, expansion into new markets, and strategic acquisitions. Additionally, the rising adoption of clean energy solutions, grid modernization, and the need for backup power during outages also contribute to this growth.

7. Detailed Products

Residential Generators

Generac's residential generators provide backup power to homes during outages, ensuring families stay safe and comfortable.

Commercial Generators

Generac's commercial generators provide reliable backup power to businesses, hospitals, and other critical facilities.

Industrial Generators

Generac's industrial generators provide high-power backup solutions for industrial applications, including manufacturing and oil and gas operations.

Clean Energy Systems

Generac's clean energy systems provide solar, battery storage, and energy management solutions for homes and businesses.

Mobile Generators

Generac's mobile generators provide portable power solutions for construction, events, and emergency response applications.

Light Commercial Generators

Generac's light commercial generators provide backup power for small businesses, restaurants, and retail stores.

Transfer Switches

Generac's transfer switches provide automatic switching between utility and generator power, ensuring seamless transitions.

8. Generac Holdings Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Generac Holdings Inc. faces moderate threat from substitutes due to the presence of alternative energy sources such as solar and wind power. However, the high upfront costs and intermittency of these sources limit their adoption, reducing the threat.

Bargaining Power Of Customers

Generac Holdings Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often critical to customers' operations, making it difficult for them to negotiate prices.

Bargaining Power Of Suppliers

Generac Holdings Inc. relies on a few key suppliers for components such as engines and alternators. While the company has some bargaining power due to its size, suppliers may still exert some pressure on prices and delivery terms.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the power generation industry. New entrants would need to invest heavily in research and development, manufacturing, and distribution, making it difficult for them to compete with established players like Generac Holdings Inc.

Intensity Of Rivalry

The power generation industry is highly competitive, with several established players competing for market share. Generac Holdings Inc. faces intense competition from companies like Cummins Inc. and Briggs & Stratton Corporation, which can lead to pricing pressure and high marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.23%
Debt Cost 8.29%
Equity Weight 59.77%
Equity Cost 10.97%
WACC 9.89%
Leverage 67.31%

11. Quality Control: Generac Holdings Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Chart Industries

A-Score: 4.8/10

Value: 3.7

Growth: 8.6

Quality: 4.5

Yield: 0.0

Momentum: 8.5

Volatility: 3.7

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A-Score: 4.4/10

Value: 4.4

Growth: 5.1

Quality: 3.0

Yield: 0.0

Momentum: 8.0

Volatility: 6.0

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A-Score: 4.1/10

Value: 1.1

Growth: 4.4

Quality: 5.4

Yield: 0.0

Momentum: 10.0

Volatility: 4.0

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Generac

A-Score: 4.1/10

Value: 2.8

Growth: 6.7

Quality: 6.2

Yield: 0.0

Momentum: 4.5

Volatility: 4.3

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A-Score: 3.8/10

Value: 5.1

Growth: 4.0

Quality: 4.8

Yield: 2.0

Momentum: 2.0

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A-Score: 3.5/10

Value: 9.2

Growth: 1.6

Quality: 3.3

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

162.33$

Current Price

162.33$

Potential

-0.00%

Expected Cash-Flows