Generac (GNRC) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research
·4-min read

Generac Holdings Inc. GNRC is scheduled to report third-quarter 2020 results on Oct 28, before the opening bell. In the last reported quarter, the company delivered a positive earnings surprise of 52.2%. The bottom line surpassed the Zacks Consensus Estimate by 48 cents. Notably, Generac delivered a trailing four-quarter positive earnings surprise of 22.2%, on average.

The Waukesha, WI-based company is expected to have recorded higher revenues year over year, primarily driven by strong demand for home standby generators. Demand for its residential products is rising due to the emerging ‘Home as a Sanctuary’ trend as more people are working, learning and spending time at home.

Factors at Play

During the quarter under review, Generac and Louisville, KY-based Virtual Peaker inked a licensing agreement, which fully integrates the Generac PWRcell suite of energy storage systems with the latter’s advanced cloud-based distributed energy platform.

Generac Power Systems introduced a more powerful addition to the Guardian series of home standby generators. Generac Power Systems unveiled new products and capabilities to the PWRcell product line that turn the promise of whole-home solar backup power into reality. Generac Power Systems and Momentum Solar’s relationship will accelerate the U.S. residential adoption of solar + storage. These developments are likely to get reflected in the upcoming results.

On Sep 1, DR Power Equipment, a division of Generac, closed the acquisition of Mean Green Products, LLC. Headquartered in Ross, OH, Mean Green Products is a leading battery-powered, commercial-grade turf care manufacturer.

Also, Generac Power Systems teamed up with Baker Electric Home Energy to boost the U.S. residential adoption of new solar + storage with Generac’s PWRcell system. Based in San Diego, Baker is a leading integrated home energy solutions provider and the sixth largest residential solar installer in Southern California.

Such developments are likely to have had a positive impact on the company’s top line. For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $683 million, indicating an increase of 13.6% from the year-ago reported number. Adjusted earnings per share are pegged at $1.75, which suggests growth of 22.4% year over year.

What Our Model Says

Our proven model predicts an earnings beat for Generac this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s exactly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Generac’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.32% as the former is pegged at $1.79 and the latter at $1.75.

Generac Holdlings Inc. Price and EPS Surprise

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

Generac Holdlings Inc. price-eps-surprise | Generac Holdlings Inc. Quote

Zacks Rank: Generac currently carries a Zacks Rank #2.

Other Stocks to Consider

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Lear Corporation LEA is slated to release third-quarter 2020 results on Oct 30. It has an Earnings ESP of +2.78% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shaw Communications SJR is scheduled to release fourth-quarter fiscal 2020 results on Oct 30. The company has an Earnings ESP of +4.17% and a Zacks Rank #2.

Newell Brands NWL has an Earnings ESP of +0.33% and a Zacks Rank of 2. The company is set to report third-quarter 2020 results on Oct 30.

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