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Generac (GNRC) to Report Q4 Earnings: What's in the Cards?

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Generac Holdings (GNRC - Free Report) is set to report fourth-quarter 2018 results on Feb 14.

The company has delivered average four-quarter positive earnings surprise of 21.1%. In the last reported quarter, Generac reported earnings of $1.43 per share that comfortably surpassed the Zacks Consensus Estimate by 35 cents.

Net Sales of $559.5 million beat the Zacks Consensus Estimate of $495 million and increased 5.3% year over year.

The Zacks Consensus Estimate for fourth-quarter earnings has remained steady at $1.39 over the past 30 days, reflecting 1.5% growth year over year. The consensus mark for revenues currently stands at $549.1 million, reflecting year-over-year increase of 12.5%.

Let’s see how things are shaping up for this announcement.

Key Factors to Watch Out

Generac is likely to benefit from strong demand for generators, due to increased power outages across the United States and Canada. These regions, which fall under the company’s domestic operating segment, account for majority of its revenues.
 

Generac Holdlings Inc. Price and EPS Surprise

 

Generac Holdlings Inc. Price and EPS Surprise | Generac Holdlings Inc. Quote

 

Heightened frequency and longer duration of power outages, mainly caused by hurricanes like Harvey, Irma, Maria, Florence and Michael, act as key catalysts for Generac Holdings. Management estimates domestic penetration of 4%, which leaves significant scope for expansion.

The company’s residential products segment, which accounts for more than 50% of revenues, offers a broad range of generators (both automatic standby & portable) and outdoor power equipment. Management expects revenues to grow on a year-over-year basis, due to strong end-market demand and lower level of home standby field inventories.

Adoption rate of Generac Holdings’ home standby generator product line has increased significantly, evident from the all-time high activation seen in the last reported quarter (September-end). The company’s timely update of the product line that now includes a Wi-Fi enabled connectivity feature is a major attraction for customers. Additionally, demand for portable generators is considerably strong.

Moreover, solid order rate and backlog of the commercial & industrial (C&I) stationary generator system reflect robust demand. The company’s C&I solutions are much in demand among telecom operators (particularly wireless carriers) and healthcare providers.

Increasing popularity of mobile products is also worth a mention here. Demand is expected to remain strong on growth in non-residential construction and prospects for large-scale infrastructure projects.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Generac has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

GTT Communications has an Earnings ESP of +173.53% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ciena Corporation (CIEN - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank #2.

Gogo Inc. (GOGO - Free Report) has an Earnings ESP of +9.46% and a Zacks Rank #2.

 

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