Trade-Ideas: Generac Holdings (GNRC) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Generac Holdings ( GNRC) as a post-market leader 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 $52.0 million.
  • GNRC is up 2.3% today from today's close.

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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, and construction markets in the United States, Canada, and internationally. GNRC has a PE ratio of 17.6. Currently there are 2 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 1.2 million shares per day over the past 30 days. Generac has a market cap of $3.0 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 0.79 and a short float of 29.1% with 14.23 days to cover. Shares are down 22.3% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Generac Holdings as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • GENERAC HOLDINGS INC's earnings per share declined by 22.4% 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 ($3.15 versus $2.49).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.7%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 37.98% 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 10.35% compares favorably to the industry average.
  • 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 significantly exceeds that of both the industry average and the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GNRC has underperformed the S&P 500 Index, declining 11.74% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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