NEW YORK (TheStreet) -- Generac Holdings (GNRC - Get Report) shares are down -3.24% to $47.16 on Tuesday after analysts at Bank of America Merrill Lynch (BAC - Get Report) downgraded the company to "neutral" from "buy".
The firm cut its price target down to $53 from $65 citing weak seasonal pickup forecasts as a reason for the more pessimistic outlook.
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TheStreet Ratings team rates GENERAC HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate GENERAC HOLDINGS INC (GNRC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, 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."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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.
- Compared to its closing price of one year ago, GNRC's share price has jumped by 36.49%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- GENERAC HOLDINGS INC's earnings per share declined by 31.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAC HOLDINGS INC increased its bottom line by earning $2.49 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($3.74 versus $2.49).
- 35.89% 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, GNRC's net profit margin of 10.14% compares favorably to the industry average.
- GNRC, with its decline in revenue, slightly underperformed the industry average of 6.5%. Since the same quarter one year prior, revenues fell by 14.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: GNRC Ratings Report