Trade-Ideas LLC identified

Generac Holdings

(

GNRC

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Generac Holdings as such a stock due to the following factors:

  • GNRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.8 million.
  • GNRC has traded 341,633 shares today.
  • GNRC traded in a range 205.9% of the normal price range with a price range of $1.47.
  • GNRC traded above its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on GNRC:

Generac Holdings Inc. designs, manufactures, and markets power generation equipment and other engine powered products for the residential, light commercial, industrial, oil and gas, and construction markets in the United States, Canada, and internationally. GNRC has a PE ratio of 16. Currently there are 3 analysts that rate Generac Holdings a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Generac Holdings has been 976,700 shares per day over the past 30 days. Generac has a market cap of $1.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.80 and a short float of 23.7% with 19.01 days to cover. Shares are down 41.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Generac Holdings as a

hold

. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • GENERAC HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, GENERAC HOLDINGS INC's EPS of $2.49 remained unchanged from the prior years' EPS of $2.49. This year, the market expects an improvement in earnings ($2.74 versus $2.49).
  • GNRC, with its decline in revenue, slightly underperformed the industry average of 14.1%. Since the same quarter one year prior, revenues fell by 20.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, GENERAC HOLDINGS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for GENERAC HOLDINGS INC is currently lower than what is desirable, coming in at 34.69%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.14% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $16.32 million or 66.64% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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