The deadly hurricane that wreaked havoc in the U.S. from Florida to North Carolina has the potential to generate $45 million to $65 million in revenue and 15 cents a share to 30 cents a share in earnings for Generac, wrote Keybanc analyst Jeffrey Hammond in a note issued Thursday. Hammond sees Generac benefiting from some people having bought generators ahead of Hurricane Matthew, while others look to make a purchase after as to be prepared for a potential power outage should another horrible storm arise.
"We received strong early indications around Hurricane Matthew, which we view as a key awareness event considering Matthew was the first significant storm to hit the U.S. in four years," Hammond said.
Genarac is no stranger to cleaning up when a major storm hits. Sales of residential products such as portable and stand-by generators, and power washers, surged 28% in the fourth quarter of 2012 in the wake of Hurricane Sandy.
All told, Hurricane Matthew likely caused $10 billion in damage, according to an estimate from Goldman Sachs. The estimate would make Hurricane Matthew the 22nd most-damaging storm since World War II, Goldman estimated. By comparison, Hurricane Sandy, the second-worst storm, triggered $50 billion to $60 billion in total damage in 2012.
Although it looks as if Hurricane Matthew didn't cause as much damage as Sandy, using the historic 2012 storm as a benchmark offers investors a snapshop into how other home-improvement companies besides Generac may be poised to soon benefit.
At home-improvement retailer Home Depot (HD) - Get Report , product categories at its Northeast stores that sold particularly well during Sandy were generators (same-store sales rose by a triple digit percentage in the fourth quarter, said the company at the time), plywood (same-store sales rose by a double-digit percentage), extension cords, water heaters and cleaning products.
Sales of products related to Sandy preparation and cleanup went onto tally about $242 million in the fourth quarter of 2012 for Home Depot, roughly $112 million higher than the sales the company realized from Hurricane Irene in the same period in 2012.
Home Depot rival Lowe's(LOW) - Get Report had a similar experience within its aisles. According to the company, it saw a "surge in demand" during Sandy that lifted its fourth-quarter 2012 same-store sales by 0.7%.