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Generac Reaches a New 52-Week High

Zacks Equity Research

Shares of Generac Holdings Inc. (GNRC) touched a new 52-week high of $41.56 during its trading session on Jul 15. This denotes an increase over the previous high of $41.48 reached on Jun 7.  

Generac Holdings closed the trading day on Jul 15 at $41.25, reflecting a solid year-to-date return of 110.2%. The trading volume for the session was 0.66 million shares. Further upside potential exists for this Zacks Rank #3 (Hold) diversified machinery company as can be deduced from its earnings estimate revisions in the last 60 days and expected earnings growth of 8.2% for 2013.

Growth Drivers

Generac Holdings’ first quarter 2013 financial results were quite decent with its adjusted earnings per share standing at $1.21, reflecting an increase of 26% year over year and roughly 23.5% above the Zacks Consensus Estimate of 98 cents.

Revenue in the quarter grew 35.7% year over year on the back of increased demand from households for back-up power and the acquisition of Ottomotores. Gross margin inched up 70 basis points due to better product prices and cost saving initiatives.   

For 2013, management of Generac Holdings increased its revenue growth guidance to low-mid teens as compared with 10% expected earlier. Gross margins are expected to be flat with respect to 2012, with operating expenses rising marginally.

Besides the financial results, Generac Holdings also paid a special cash dividend of $5.00 per share to its shareholder of record on Jun 12.

Generac Holdings had a positive earnings surprise in all of the four trailing quarters with an average of 14.3%. This along with the first quarter 2013 results has raised optimism for a better performance ahead. We currently have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +4.4% for 2013 and +14.0% for 2014.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for Generac Holdings increased by 1.2% to $3.45 and $3.42 per share for 2013 and 2014, respectively.

Other stocks to watch out for in the industry are EnerSys (ENS), Broadwind Energy, Inc. (BWEN) and Crane Co. (CR).

Read the Full Research Report on CR

Read the Full Research Report on BWEN

Read the Full Research Report on GNRC

Read the Full Research Report on ENS

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