Generac Holdings Inc (GNRC)'s Winning Formula: Financial Metrics and Competitive Strengths

Exploring the Robust Financial Health and Growth Trajectory of Generac Holdings Inc

Generac Holdings Inc (GNRC, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $125.03, Generac Holdings Inc has witnessed a daily loss of 0.61%, marked against a three-month change of 21.21%. A thorough analysis, underlined by the GF Score, suggests that Generac Holdings Inc is well-positioned for substantial growth in the near future.


What Is the GF Score?

The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.

Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability and growth rank, but a slightly lower GF Value rank, GuruFocus assigned Generac Holdings Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.

Understanding Generac Holdings Inc's Business

Generac Holdings Inc, with a market cap of $7.68 billion and sales of $4.01 billion, operates as a leading manufacturer of power generation equipment. The company's operating margin stands at 8.58%, showcasing its efficiency in managing operations. Generac Power Systems designs and manufactures a diverse range of products, including standby generators, portable generators, lighting, outdoor power equipment, and a suite of clean energy products. The majority of its sales are generated within the United States, indicating a strong domestic market presence.


Financial Strength Breakdown

According to the Financial Strength rating, Generac Holdings Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With a favorable Debt-to-Revenue ratio of 0.43, Generac Holdings Inc's strategic handling of debt solidifies its financial health.

Profitability Rank Breakdown

The Profitability Rank shows Generac Holdings Inc's impressive standing among its peers in generating profit. Furthermore, Generac Holdings Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2019: 36.19%; 2020: 38.53%; 2021: 36.39%; 2022: 33.34%; 2023: 37.46%. This trend underscores the company's growing proficiency in transforming revenue into profit.

Growth Rank Breakdown

Ranked highly in Growth, Generac Holdings Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 26.3%, which outperforms better than 87.6% of 2751 companies in the Industrial Products industry. Moreover, Generac Holdings Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 18.3%, and the rate over the past five years is 20.5%. This trend accentuates the company's continued capability to drive growth.


Next Steps

Considering Generac Holdings Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on such robust financial health and market leadership may find Generac Holdings Inc an attractive option. With a GF Score that signals strong future returns, Generac Holdings Inc stands out as a compelling investment opportunity.

GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.


I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.