A Fresh Look at Generac Holdings (GNRC) Valuation After Quarterly Miss and Lowered Sales Outlook

Generac Holdings (GNRC) delivered third-quarter financial results that came in below expectations, as a stretch of unusually light power outages dampened residential generator demand. The company also lowered its 2025 sales growth outlook.

See our latest analysis for Generac Holdings.

Following the disappointing quarter and reduced guidance, Generac's share price tumbled 15.3% right after results but is still up 7% year-to-date. The stock’s 1-year total shareholder return is now slightly negative at -0.53%. Its impressive 65.95% three-year total shareholder return hints at strong historical growth, even as short-term momentum has clearly faded.

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So with the stock well off its highs and analyst price targets still implying meaningful upside, is Generac now trading at a discount, or is the market already factoring in the company's growth potential?

Most Popular Narrative: 19.8% Undervalued

Generac's most followed narrative values the stock notably above its latest close, suggesting investors may be overlooking the longer-term path to higher margins and market expansion. The latest consensus points to meaningful growth drivers that could reshape outlooks for years to come.

“Accelerating demand for backup power solutions in data centers driven by AI adoption and global digitalization has resulted in a structural supply deficit for large commercial generators. Generac's rapid entry and over $150 million backlog position it to capture significant revenue growth and operating leverage over the next several years, with further potential upside as the company expands capacity to address 2027+ demand.”

Read the complete narrative.

What exactly is fueling this bullish narrative? The secret lies in projections for margin expansion, transformative growth in key segments, and forward-looking multiples that hint at a possible rerating. Click through to see which numbers make the difference between today’s valuation and tomorrow’s opportunity.

Result: Fair Value of $209.59 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing weakness in home standby generator demand and uncertainty surrounding the residential solar market could limit Generac's potential to achieve these optimistic targets.

Find out about the key risks to this Generac Holdings narrative.

Another View: What Do the Ratios Say?

Looking at Generac through the lens of price-to-earnings, its ratio of 31.8x actually overshoots both the US Electrical industry average (31.4x) and peer average (40.6x), yet sits comfortably below the fair ratio of 35.7x. This suggests there is some built-in margin for safety, but also underlines ongoing valuation risks. Will the market see this as a future opportunity or a red flag?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Generac Holdings Narrative

Keep in mind, if these perspectives do not fully align with your own analysis, you can quickly dig into the data and craft a personalized outlook in just a few minutes. Do it your way

A great starting point for your Generac Holdings research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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