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Generac Holdings Inc. Stock Upgraded (GNRC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Generac Holdings (NYSE:GNRC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 12.7%. Since the same quarter one year prior, revenues rose by 48.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, GENERAC HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $21.12 million or 37.94% when compared to the same quarter last year. In addition, GENERAC HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -19.75%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • 37.40% is the gross profit margin for GENERAC HOLDINGS INC which we consider to be strong. Regardless of GNRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.90% trails the industry average.
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Generac Holdings Inc. designs, manufactures, and markets a range of generators and other engine powered products for the residential, light commercial, industrial, and construction markets in the United States and Canada. The company has a P/E ratio of five, equal to the average industrial industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Generac has a market cap of $1.71 billion and is part of the industrial goods sector and industrial industry. Shares are down 7.8% year to date as of the close of trading on Monday.

You can view the full Generac Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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