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 $21.2 million.
  • GNRC has traded 1.2 million shares today.
  • GNRC traded in a range 264.8% of the normal price range with a price range of $2.64.
  • GNRC traded above its daily resistance level (quality: 75 days, meaning that the stock is crossing a resistance level set by the last 75 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 17. Currently there are 3 analysts that rate Generac Holdings a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Generac Holdings has been 795,700 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 1.92 and a short float of 19.7% with 17.86 days to cover. Shares are down 6.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Generac Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 20.8%. Since the same quarter one year prior, revenues slightly increased by 2.0%. 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.
  • 37.47% 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 9.47% compares favorably to the industry average.
  • GENERAC HOLDINGS INC's earnings per share declined by 5.8% in the most recent quarter compared to 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 ($2.80 versus $2.49).
  • Net operating cash flow has decreased to $35.28 million or 38.34% when compared to the same quarter last year. Despite a decrease in cash flow of 38.34%, GENERAC HOLDINGS INC is in line with the industry average cash flow growth rate of -43.05%.
  • The debt-to-equity ratio is very high at 2.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, GNRC's quick ratio is somewhat strong at 1.13, demonstrating the ability to handle short-term liquidity needs.

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