Has Generac Holdings Inc (NYSE:GNRC) Improved Earnings Growth In Recent Times?
When Generac Holdings Inc (NYSE:GNRC) released its most recent earnings update (31 March 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Generac Holdings has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see GNRC has performed. View our latest analysis for Generac Holdings
Were GNRC’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to examine many different companies on a more comparable basis, using the latest information. For Generac Holdings, its latest trailing-twelve-month earnings is US$173.49M, which, relative to the previous year’s figure, has escalated by a substantial 72.69%. Given that these values may be relatively short-term, I’ve calculated an annualized five-year value for Generac Holdings’s earnings, which stands at US$153.20M This means that, generally, Generac Holdings has been able to steadily grow its profits over the past few years as well.
How has it been able to do this? Let’s see if it is merely due to an industry uplift, or if Generac Holdings has seen some company-specific growth. In the last few years, Generac Holdings top-line expansion has outpaced earnings and the growth rate of expenses. Though this brought about a margin contraction, it has cushioned Generac Holdings’s earnings contraction. Eyeballing growth from a sector-level, the US electrical industry has been growing, albeit, at a unexciting single-digit rate of 8.20% in the past year, and a substantial 13.48% over the past five. This suggests that any uplift the industry is profiting from, Generac Holdings is able to amplify this to its advantage.
What does this mean?
Though Generac Holdings’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Generac Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for GNRC’s future growth? Take a look at our free research report of analyst consensus for GNRC’s outlook.
Financial Health: Is GNRC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
