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 $158.88, Generac Holdings Inc has witnessed a daily gain of 1.2%, marked against a three-month change of 0.53%. A thorough analysis, underlined by the GF Score, suggests that Generac Holdings Inc is well-positioned for substantial growth in the near future.
Understanding 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.
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have a 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 GF Score of 95 out of 100, Generac Holdings Inc signals the highest outperformance potential.
Company Overview
Generac Holdings Inc designs and manufactures power generation equipment serving residential, commercial, and industrial markets. It offers standby generators, portable generators, lighting, outdoor power equipment, and a suite of clean energy products. Sales generated in the United States account for the majority of total sales. With a market cap of $9.45 billion and sales amounting to $4.12 billion, Generac Holdings Inc maintains an operating margin of 11.88%, showcasing its efficiency in managing operational costs.
Financial Strength Analysis
According to the Financial Strength rating, Generac Holdings Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Generac Holdings Inc stands impressively at 5.18, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.41, Generac Holdings Inc's strategic handling of debt solidifies its financial health.
Profitability Insights
The Profitability Rank shows Generac Holdings Inc's impressive standing among its peers in generating profit. The Piotroski F-Score confirms Generac Holdings Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency. Generac Holdings Inc's strong Predictability Rank of 3.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Potential
Ranked highly in Growth, Generac Holdings Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 18.5%, which outperforms better than 74.96% of 2,832 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 1.3, and the rate over the past five years is 10.7. This trend accentuates the company's continued capability to drive growth.
Conclusion
Generac Holdings Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. The company's strategic initiatives and robust financial health make it a compelling choice for value investors seeking long-term growth. As the demand for power generation equipment continues to rise, Generac Holdings Inc is well-positioned to capitalize on these opportunities. For those interested in exploring more companies with strong GF Scores, GuruFocus Premium members can utilize 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.
