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Bull Of The Day: Generac (GNRC)

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Generac (GNRC - Free Report) is a Zacks Rank #1 (Strong Buy) following a solid beat and raise quarter.  Let's take a look a the recent numbers and how they have helped the stock reach the best Zacks Rank.  Today, GNRC is the Bull of the Day.

Description

Generac Holdings Inc. 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. The Company offers generators fueled by natural gas, liquid propane, gasoline, diesel, and Bi-Fuel. It also provides air-cooled engines. In addition, Generac designs, manufactures, sources and modifies engines, alternators, automatic transfer switches and other components necessary for its products. The Company's generators are fueled by natural gas, liquid propane, gasoline, diesel and Bi-Fuel (combined diesel and natural gas). Generac Holdings Inc. is headquartered in Waukesha, Wisconsin.

Recent Earnings

On May 2, GNRC reported earnings of $0.74 and that was $0.11 ahead of the consensus.  Revenues rose 20% from the prior year and came in at $397M and that was ahead of the $390M estimates.

The company also guided FY18 revenues to growth of 6-8%, and that is higher than the 3-5% growth rate that was previously provided.  The math works out to sales of between $1.77B to $1.81B with the consensus at the time at $1.77B.

Earnings Estimates

Following the report, estimates have bounced higher. The Zacks Consensus Estimate was calling for $3.57 for 2018, but that number is now $3.75.  

The 2019 Zacks Consensus Estimate also moved higher following the report.  Analysts have moved numbers up to $3.93 from the $3.75 level it was at before the report.

The current consensus for next quarter is now at $0.91, an increase of 6 cents from the level it was at previous to the most recent earnings release.

Zack Rank #1 (Strong Buy)

The increase in earnings estimate is what drives the Zacks Rank.  When there is a solid move higher in estimates for this year and next, the Rank tends to move up.

That is just what we see here with GNRC

Valuation

I see the stock trading at an attractive valuation, with a 13.4x forward earnings multiple and a 13.5x trailing number.  The price to book is a little rich at 5.5x while the price sale multiple of 1.8x is a little below the industry average.  

Given the improved outlook, GNRC is certainly a stock that I would want to keep on your radar screen.

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