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Generac Holdings (GNRC) stock forecast: Energised start to 2022?

By Prachi Sinha

Edited by Vanessa Kintu

17:07, 15 June 2022

Generac Holdings (GNRC) stock forecast: Energised start to 2022?
Generac Holdings (GNRC) stock forecast: Energised start to 2022? Photo: rafapress / Shutterstock.com

US-based power generation manufacturer Generac Holdings (GNRC) was founded in 1959. It’s a leading provider in the residential and commercial domains. The company offers a wide array of products, including residential and commercial standby generators, energy management devices, advanced power grid software platforms, and engine and battery powered tools.

To keep up with the evolving environment, Generac and its portfolio of brands has committed to providing sustainable, clean energy products. Using its leading position in the energy power domain, Generac aims to move the industry toward clean energy solutions. On 19 May 2022, Generac Grid Services, a subsidiary of Generac Holdings, announced a new programme for power grid strengthening paired with reduced fossil fuel usage.

Generac companies

The demand for Generac products saw a massive increase as a result of Covid-19 and the subsequent global lockdowns. With the increase of people working from home during the pandemic, the need for standby generators to maintain business continuity during power outbreaks peaked. As a result, on 1 November 2021 the GNRC stock price reached an all-time high of $505.80

However, a post-pandemic decline has been apparent in the GNRC recent stock performance. The stock has corrected by nearly 25%, year to date (YTD). At the time of writing (14 June 2022), the GNRC stock had last closed at $261.54. 

How does the GNRC share price prediction look as this pandemic-star stock navigates the current markets? Join us as we dig deep into Generac stock news and outline a plausible Generac stock forecast.

Generac Holdings fundamental analysis: Q1 financial results

On 4 May, Generac released its Q1 2022 financial results for the quarter ended 31 March. At $1.14bn reported sales, the company’s top-line increased by 41%, from prior year’s Q1 sales of $807m.

Generac’s domestic sales of $964.7m contributed approximately 85% to the overall sales of the company, a 39% increase compared to $692.7m in Q1 2021. Approximately 5% of the revenue growth was as a result of Generac’s acquisitions. Additionally, residential and commercial and industrial (C&I) channels continued to drive demands for standby generators.

In its Q1 earnings call, it was mentioned that as a direct impact of Russia’s invasion of Ukraine, demand for portable generators, C&I generators and mobile products remained inflated in European markets. 

With its operations sweeping through Europe and Latin America, Generac’s international segments showed strong sales growth. The top-line through the company's international operations increased by 49% YTD, from $114.7m to $171.2m. Of this, nearly 22% growth was owing to acquisitions and foreign currency impact.

Recent acquisitions of Generac

On 1 December 2021, Generac announced its acquisition of ecobee, a leader in sustainable smart-home solutions. The aim of the acquisition was for Generac to leverage ecobee’s efficient energy management products in order to boost its own intelligent home energy system offerings. In its Q1 results, Generac mentioned growing cross-selling opportunities with ecobee’s hardware products.  

Reporting a growing popularity with utilities and grid operators, ecobee recently announced a demand response programme with one of Colorado’s local utility providers. With such programmes, ecobee aims to grow broader awareness about its smart thermostats, which provide energy conservation, financial benefits and enhanced grid stability.

Generac’s recent international acquisition of Off Grid Energy has also been performing well. By utilising Generac’s distribution partners globally, Off Grid Energy’s mobile storage systems have found incremental demands across the world. To fully leverage demand in these new geographies, Generac mentioned ongoing development projects on its mobile storage products to further build on its power capabilities.

While Generac has been making solid efforts to drive its top-lines through brand acquisitions and product developments, its gross profit margin remained reduced, adversely affected by global supply chain issues, dropping to 31.8% compared to Q1 2021’s 39.9%. 

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The cost of goods sold increased by 60%, from $485.6m to $775.1m, due to peaking inflation. However, with adjustable net income attributable to the company reported at $2.09 a share, it beat Zacks’ consensus estimate of $1.92.

Playing on robust sales growth, Generac raised its full-year 2022 net sales growth guidance to 36%-40% from the previous 32%-36%. Additionally, it expected adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), before deducting for non-controlling interests, to be at 21.5%-22.5%. Considering the high inflationary environment, the company has brought down its adjusted EBITDA margin guidance from the previous expectation of 22%-23%.

Recent collaboration with German utility RWE 

Gauging Generac Grid Services’ success through its uninterrupted automatic Frequency Restoration Reserve (aFRR) capacity in Germany’s energy market since December 2021, RWE announced an expanded corporation with Generac’s subsidiary on 2 June 2022.

Through its Generac Grid Services’ Concerto™ platform, Generac holds the potential to increase energy efficiencies and build a sustainable power grid. On the other hand, by its D-Central program, RWE facilitates commercial and individual customers to integrate their distributed energy resources into RWE’s virtual power plants.

Generac’s Concerto has significantly increased RWE’s ability to boost its revenues by fully leveraging the available DER flexibility. The two companies are set to launch two more products in 2022 to further build on their market operation.

Michael Ruth, vice president of Product at Generac Grid Services said:

“Generac Grid Services is proud to support RWE in providing grid-balancing solutions that support a reliable grid as more intermittent renewables connect to the system. Concerto's successful, round-the-clock performance demonstrates distributed energy resources' viability to support real-time grid needs when paired with our industry-leading control platform.”

Boosting investor sentiment, this announcement contributed to a 10% increase in the GNRC stock price. From trading at $243.86 a day before, the stock closed at $268.95 on 2 June.

GNRC stock forecasts

Generac Holdings (GNRC) 5-year stock price chart

As of 14 June, data compiled by TipRanks showed 15 out of 16 analysts suggested to ‘buy’ GNRC stock and one recommended ‘hold’. The consensus Generac stock price target for the 12-month share price was $399.33. The projection varied from a low of $282 to a high of $561. The average price target represented a 52.68% upside change from the last trading price of $261.54, as of 14 June.

Algorithm forecaster Wallet Investor predicted that the stock value could increase to $357.156 by December 2022. In its long-term Generac stock market expectations it anticipated the stock to close at $711.768 and $829.962 by December 2025 and December 2026, respectively.

Furthermore, AI Pickup anticipates Generac stock projection for 2030 to be in the range of $342.75 to $404.25.

After the release of Generac’s financial results on 4 May, several equity analysts issued their revised price targets on GNRC stock expectations. On 5 May, UBS Capital reiterated its ‘buy’ rating but downgraded the target price to $450 from $500. Roth Capital, on 24 May, dropped its price target to $320 from $555 but kept its ‘buy’ rating. Lastly, on 25 May, Northland Securities initiated its coverage on GNRC at ‘outperform’ with a $370 price target.

When looking for price predictions for GNRC, it’s important to bear in mind that forecasts and price targets can be wrong. Analysts’ Generac stock analyses are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results. Always do your own research. And never invest money you can’t afford to lose. 

FAQs​​

Is Generac Holdings stock a good investment?

Generac’s current stock price is significantly lower compared to its pandemic highs, although it has increased by over 20% in the last month. As of 14 June, data compiled by Tip Ranks showed out of 16 Wall Street analysts, 15 gave GNRC stock a buy recommendation. 

However, whether Generac Holdings is a suitable investment for you depends on your own investment objectives. You should conduct your own research and then make a decision regarding whether Generac stock is a buy, sell or hold. It’s important to reach your own conclusion on a company’s prospects and the likelihood of achieving analysts’ targets. Past performance is no guarantee of future results. Always do your own research. And never invest money you can’t afford to lose.

Will GNRC stock price go up or down?

At the time of writing (14 June), algorithm-based forecasting service Wallet Investor predicted that the GNRC stock price could move higher and close at $357.156 by December 2022. In a long-term forecast, AI Pickup projected the stock price could be in the range of $342.75 to $404.25 by 2030.

However, analysts’ forecasts can be wrong and have been inaccurate in the past. Always do your own research. Remember to never invest money you can’t afford to lose.

Why has the GNRC stock price been going up?

Generac Holdings reported strong financials for the Q1 2022, with over 40% increase in its top-lines. The company has been making strategic acquisitions, which contributed to its overall growth.

Will Generac stock split?

Generac Holdings has announced zero stock splits in its history, as of 14 June 2022.

Does Generac stock pay dividends?

The GNRC stock pays no dividends.

Markets in this article

GNRC
Generac Holdlings Inc.
156.70 USD
-0.58 -0.370%

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