At the current price of $119, what is the market’s view of Generac Holdings’ future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, Generac Holdings shares will need to reach $199. Upper quartile performance will require a $235 Generac Holdings stock price by 2029.
Executive Summary
- Price Target Research identifies Generac Holdings as having: above average financial strength, average profitability, instability, and very low expected growth.
- Average valuation, below market shareholder returns. Current valuation levels are average relative to the Generac Holdings Peer Group. Recent market returns have underperformed the Generac Holdings Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Generac Holdings shares should reach a level of $109 by 2029 — an -1.4% per year total shareholder return. A 2029 stock price of $199 would reflect median performance and a price of $235 would be required to reach upper quartile performance.
- Generac Holdings’ past growth is average. Historical growth has been average relative to the Generac Holdings Peer Group and forecasted growth is relatively very low. Asset Growth has been superior. EPS Growth has lagged. Generac Holdings’ historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity. Generac Holdings’ consensus growth expectations are lower than historical growth.
- Profitability is only average. The company has high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- Generac Holdings’ risk profile is unfavorable. Overall variability has been above average with above average revenue variability, only average E.P.S. variability, and above average stock price volatility. Financial Strength is relatively high and earnings’ expectations are below average. The debt/capital ratio has been relatively steady.
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