Generac Holdings GNRC
Industrials · Industrial - Machinery · Synthos Deep Dive · 2026-07-03
The Overview
Generac makes the backup generators that switch your house on when the power goes out — the big grey box next to the AC unit — plus batteries and clean-energy gear. When storms knock out the grid, sales boom; in a calm year, they sag. That's the whole story.
Right now the stock is expensive. Last year sales actually shrank a little and profits fell hard, but the share price has nearly doubled off its low because investors are betting the next two years bring a big rebound (more storms, an aging grid, data-center power needs). You're paying a rich price today for a recovery that hasn't fully shown up yet.
Our verdict is Watch — a decent company, but not at this price and not without any expert conviction behind it. Here's what our three scores mean in plain terms:
- Downside Risk 7/10 (elevated). The stock swings hard (it has fallen ~50% from a peak before) and carries meaningful debt; if the weather doesn't cooperate, it can drop fast.
- Growth Quality 6/10 (decent, not elite). Sales can grow nicely, but profit margins are ordinary for an industrial and last year hit an air-pocket.
- Exponential Potential 5/10 (moderate). There's a real long-term tailwind (a shaky electric grid), but this is a boom-and-bust business, not a steady rocket.
The one big worry: demand depends on storms and blackouts you can't predict. A quiet hurricane season and the bull case evaporates.
Putting a number on it: our fair-value estimate is $278 against a current price of $183.80 — real upside if our numbers are right.
Our summary metrics
Beta 1.91, 50% peak-to-trough drawdown, 78× trailing EPS and net-debt/EBITDA 2.1× on a weather-cyclical demand base.
~29% forward EPS CAGR off a depressed base, but only 38% gross margin, 5.8% ROIC and a 2025 earnings air-pocket.
Genuine grid-resilience / home-standby runway and an accelerating out-year ramp — but a proven boom-bust cyclical, not a secular compounder.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Genuine grid-resilience / home-standby runway and an accelerating out-year ramp — but a proven boom-bust cyclical, not a secular compounder.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $297 (high $335 / low $257; 27 Buy · 12 Hold · 0 Sell) — context, not our anchor |
| Valuation | 78× trailing EPS (depressed base) · 39× FY26E · 23× FY27E · 18× FY28E · 14× FY30E · EV/S 3.7× · EV/EBITDA 31× |
| Technicals | Mixed — $253, −14.5% off 52-wk high, below 50-DMA, above 200-DMA, RSI 49, +72% 12-mo (SPY +21%) but a −50% max drawdown in the price action |
| Conviction | Low — 0 expert voices in the Synthos KB; call rests entirely on fundamentals + quant |
| Position sizing | Watch / small tactical only, ≤1–2% if bought at all; wait for a cyclical entry |
What the experts actually said 2 traceable claims on GNRC · showing the highest-conviction voices
“Caterpillar (generators) and Generac benefit from AI electricity buildout — the electricity-side names get pulled in as AI power demand explodes.”
Every claim reconciles to a real claim_id in the Synthos knowledge base — this is the evidence the verdict is built on, not vibes. Management (the company itself) is shown but half-weighted; one cautionary voice is included on purpose.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $183.80, 19% below the 50-day average ($227), 12% below the 200-day average ($208) — a downtrend. 38% below the 52-week high of $296, 35% above the 52-week low of $136.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $183.80 is currently at/below the lower band (potentially oversold) (band $191–$228).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 31.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently below its signal line by 1.28, negative momentum.
Relative performance vs S&P 500 & its sector (XLI (sector)), set to 100 a year ago
Solid = GNRC · dashed = S&P 500 · dotted = XLI (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Generac Holdings (NYSE: GNRC) is a Waukesha, Wisconsin manufacturer founded in 1959 and public since 2010. It is the dominant US brand in residential automatic standby generators — the permanently installed home backup power systems (7.5kW–150kW) — and also makes portable generators, commercial & industrial (C&I) generators up to 3,250kW for hospitals, data centers, telecom and municipal infrastructure, plus a clean-energy line (PWRcell energy storage, PWRview monitoring) and the Mobile Link remote-monitoring platform. Fiscal year ends December 31. CEO is Aaron Jagdfeld (also a director). ~9,400 employees.
Revenue mix (what the data shows):
- By segment: As of 2026-03-31 the company reorganized its two reportable segments from Domestic / International to Residential / Commercial & Industrial (per the 8-K furnished 2026-04-29). FMP's product-segmentation feed is thin here — it only isolates Extended Warranties $219.4M (FY25) — and provides no geographic breakout. Historically the business is heavily US / residential-weighted, with residential standby the swing factor tied to power-outage activity.
- Demand drivers: major weather events / grid outages, aging US electrical infrastructure, home-price and interest-rate sensitivity (financed installs), and — the newer leg the bulls emphasize — data-center and grid-services power demand.
This is fundamentally a cyclical industrial whose best years follow big storm seasons (2020–2021) and whose worst years follow calm ones (2022–2023 destock). Treat the multiyear estimate ramp with that lens.
2. The expert thesis — why the panel is bullish (traceable)
There is no expert coverage for GNRC in the Synthos knowledge base. total_claims = 0, net_bullish_voices = 0. No distilled voice — bullish or cautionary — has been recorded on this name.
That means this report carries no conviction-track signal. Every judgment below is derived from the fundamentals (FMP filings), the analyst-estimate consensus, and quantitative/technical data — and is labeled as such. We do not manufacture a thesis to fill the gap. When Synthos has no traceable expert claims, the honest default skews toward Watch/Avoid unless the raw numbers are compelling enough on their own to earn a Buy. Here they are not: the fundamentals are decent but cyclical, and the valuation is full. Hence Watch.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 7 · Elevated | Beta 1.91, a −50% max drawdown in the price action, 78× trailing EPS on a depressed base, net-debt/EBITDA 2.1×, and demand that is structurally weather-cyclical. Financially solvent, but this stock moves. |
| Growth Quality | 6 · Decent | Forward EPS CAGR ~29% (FY26→FY30) but off a 2025 air-pocket; only 38% gross margin, 5.8% ROIC, 7.2% ROE — ordinary industrial economics, not a high-return compounder. |
| Exponential Potential | 5 · Moderate | Genuine grid-resilience / home-standby-penetration runway and an accelerating 2026→2028 ramp, but a demonstrated boom-bust cyclical caps the "secular exponential" claim. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is the expected path, so a weighted blend would just restate it with false precision. The cases bound the range.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | Active storm season + data-center/grid-services demand inflects; the out-year ramp is real. FY27E EPS beats toward ~$12 (vs $11.10 cons), the market extends a growth multiple ~30× on FY27. | ~$360 (+42%) |
| Base (our anchor) | Estimates roughly hit: FY26E EPS $6.51, FY27E $11.10. A cyclical recovering to trend earns ~25× FY27E — discounted vs the ramp for weather risk. | ~$278 (+10%) |
| Bear | Mild weather + rate-sensitive residential demand stalls; the 2027 ramp slips a year. FY27E EPS misses to ~$8.5; multiple de-rates to a cyclical ~20×. | ~$175 (−31%) |
Synthos fair value = the base case, ~$278 (+10%), with the full $175–$360 span as the honest range. This sits slightly below the Street's $297 consensus — we discount the out-year ramp more heavily for weather/cyclicality risk and the absence of any expert corroboration. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating multi-baggers-from-here). GNRC is neither cleanly — it is a cyclical with a genuine secular tailwind:
- Forward growth: revenue CAGR FY25→FY30E ~11.9% ($4.21B → $7.41B); EPS CAGR FY26E→FY30E ~29% ($6.51 → $17.84) — but that EPS CAGR is flattered by a depressed 2025 base (GAAP EPS fell to $2.69 on a Q4 loss).
- Acceleration (the 2nd derivative) is genuinely positive near-term, then fades: revenue growth −2.0% (FY25 actual) → +16.8% (FY26E) → +14.2% (FY27E) → +15.2% (FY28E) → +13.7% (FY29E) → +0.7% (FY30E). The ramp is front-loaded 2026–2028, then flattens — consistent with a cyclical recovering to a new trend, not open-ended exponential growth.
- Room to run: at $14.9B market cap GNRC is mid-cap, not a mega-cap bumping the law of large numbers. US home-standby penetration is still low single digits of eligible homes, and grid-resilience + data-center backup are real incremental TAM. Room exists — the constraint is cyclicality, not size.
- Reinvestment runway: FY25 FCF $268M (down from $605M FY24 on an inventory build), capex ~$170M — self-funding but not gushing; the story needs the demand cycle to turn, not just reinvestment.
Exponential Potential: Moderate (5/10). Own the recovery if you want the cyclical bet, but do not mistake the 2026–2028 EPS ramp for durable exponential compounding. A truly accelerating, non-cyclical mid-cap with these numbers would score 7–8; the weather dependence pulls it to a 5.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $4.209B, −2.0% (FY24 $4.296B, +6.8% on FY23 $4.023B). The peak was FY22 $4.565B — revenue has been range-bound / below peak for three years, the signature of a cyclical in a post-boom digestion.
- Quarterly trajectory (the turn to watch): Q1'25 $942M → Q2 $1,061M → Q3 $1,114M → Q4 $1,092M → Q1'26 $1,059M (+12.4% YoY). Q1'26 is the clearest sign the cycle is re-accelerating off the 2025 trough.
- Margins: gross 38.1% TTM, EBITDA 11.8% TTM, net 4.4% TTM — ordinary industrial margins, and the net margin is currently depressed. Note Q4'25 was an operating loss (−$10.8M EBIT, −$0.42 EPS), which is what dragged FY25 GAAP EPS to $2.69 vs $5.39 in FY24.
- Earnings: FY25 net income $159.6M (EPS diluted $2.69), down sharply from FY24 $325M / $5.39. Q1'26 rebounded to $1.25 diluted and beat (GAAP EPS $1.80 actual vs $1.33 est per the earnings calendar).
- Cash flow: operating CF $438M, capex −$170M, FCF $268M FY25 (down from $605M FY24 — an inventory build of ~$163M consumed working capital). FCF yield ~2.2%.
- Balance sheet: total debt $1.33B, net debt $992M, net-debt/EBITDA 2.07× — investment-grade-ish (letter rating B- in the FMP model) and serviceable (interest coverage 4.7×), but not a fortress. Current ratio 2.0×; inventory is elevated at $1.25B (171 days) — a cyclical inventory overhang to watch.
6. Valuation — priced in or room?
GNRC is not cheap on any current measure: 78× trailing EPS (depressed base), 31× EV/EBITDA, 3.7× EV/sales, 5.5× book. The trailing P/E is distorted by the 2025 earnings air-pocket, so the fair way to value it is forward — and even there the multiple only becomes reasonable if the ramp lands: 39× FY26E → 23× FY27E → 18× FY28E → 14× FY30E. In other words, the market is already paying for the 2027–2028 recovery today. If estimates hit, the stock de-rates into its growth and looks fine at 23× FY27E; if the cycle disappoints, 39× FY26E is a long way to fall. Street targets (context): consensus $297, high $335, low $257, 27 Buy / 12 Hold / 0 Sell — a constructive-but-not-euphoric Street. Our $278 base FV sits just under consensus because we haircut the out-year ramp for weather risk and note there is no expert corroboration in our KB. Not a value buy; a cyclical-recovery-at-a-full-price situation — hence Watch, not Buy.
7. Technicals (from the tech block)
- Trend: mixed / neutralizing. $253 sits below the 50-DMA ($263.65) but above the 200-DMA ($200.05) — the intermediate trend has stalled while the long-term uptrend holds. MACD +3.7 (mildly positive).
- Location: −14.5% off the 52-week high ($295.54), +85% off the 52-week low ($136.37) — a big round-trip already banked this year. The price action also shows a −50% max drawdown from peak, a blunt reminder of how violently this name can move.
- Momentum: RSI(14) 48.5 — dead neutral, neither oversold nor overbought. No stretched signal either way.
- Relative strength: GNRC +72% 12-mo vs SPY +20.6% and QQQ +30.3%, +26.9% 3-mo vs SPY +13.7% — strong outperformance, but note the 6-month +83% shows most of that came in a sharp recovery move that has since cooled (now below the 50-DMA).
- Read: technicals are non-confirming — the name has run hard, given back ~15%, and is consolidating below its 50-DMA. There is no urgency to chase; a cyclical entry lower (toward the 200-DMA ~$200, or a demand-driven pullback) would materially improve the risk/reward.
8. Moat & competitive position
Generac's moat is real but narrow and cyclical: (1) brand and dealer network — it is the default US home-standby brand with a large installed base and a wide independent dealer/installer channel that is genuinely hard to replicate; (2) scale and vertical integration — it makes its own engines, alternators, controls and enclosures; (3) installed-base / attach — Mobile Link monitoring and aftermarket parts/warranties (the $219M Extended Warranties line) add recurring-ish revenue. The weaknesses: demand is weather-driven and rate-sensitive, the clean-energy (storage/solar) push has been competitive and lower-margin, and there is no pricing-power moat comparable to a true franchise. Gross margin of 38% and ROIC of 5.8% confirm "good industrial," not "great franchise."
Peer set (FMP-supplied, diversified industrials — not pure comps): Regal Rexnord $14.5B, Crane $12.6B, Watts Water $12.3B, Applied Industrial $12.2B, SPX Technologies $11.4B, Donaldson $10.3B, Flowserve $9.2B, A.O. Smith $8.8B, Pool Corp $8.0B, Parsons $6.0B. GNRC ($14.9B) is at the top of this mid-cap machinery cohort. Note these are general industrials; GNRC's true competitive frame is power-generation specialists (Cummins, Kohler, Briggs) and energy-storage entrants, which the FMP peer list does not capture.
9. Management, capital allocation & guidance
- Capital allocation: disciplined and shareholder-oriented — $148M of buybacks in FY25 (and $153M FY24), essentially no dividend (yield 0%), modest bolt-on M&A. Debt is being paid down modestly (net debt fell from $1.53B FY23 → $992M FY25). Reasonable stewardship, though buying back stock at 78× trailing is not obviously accretive.
- Insider activity: mixed and worth noting. CEO Aaron Jagdfeld sold 5,000 shares at $288.05 on 2026-07-01 (filed 2026-07-02) — a discretionary sale near the highs, on top of routine option-exercise-and-sell activity by other officers (e.g. President Generac Home in June). A director received a stock award. Not a mass exodus, but a CEO sale near a 52-week high is a yellow flag rather than green.
- Management's own guidance: Not available in usable form. The latest SEC 8-K (Item 2.02, furnished 2026-04-29 for Q1'26) is cover boilerplate only — it references an attached press release and non-GAAP definitions but contains no revenue/outlook numbers in the machine-readable body. It also discloses the segment reorganization (Domestic/International → Residential/Commercial & Industrial, effective 2026-03-31). Because the actual guidance figures live in the un-fetched Exhibit 99.1 press release, we do not have management's dated forward guidance to quote here and will not fabricate it. Treat the analyst-estimate ramp in §3–6 as the Street's view, not management's own words.
10. Catalysts & what to watch
- Next earnings: 2026-07-29 (Q2'26; Street EPS $2.00, revenue ~$1.18B). The key line: residential standby demand and orders — is the Q1'26 +12% re-acceleration continuing, or was it a one-off?
- Storm/outage season (Jun–Nov): the single biggest external swing factor. An active hurricane/derecho season lifts standby demand; a calm one deflates the bull case.
- New-segment disclosure: first clean look at Residential vs Commercial & Industrial economics under the reorganized reporting — watch the residential margin.
- Data-center / grid-services traction: any concrete revenue from large-scale backup power and grid services would validate the newer secular leg.
- Inventory normalization: the $1.25B / 171-day inventory needs to work down as sell-through improves — a working-capital/FCF tell.
Thesis tripwires (what would change the call): two consecutive quarters of residential order deceleration; a mild storm season with guidance cut; net-debt/EBITDA drifting above ~2.5×; or the 2027 EPS ramp being pushed out in consensus. Conversely, an active season + sustained double-digit residential growth would move this toward Buy — Tactical.
11. Key risks
- Weather / demand cyclicality (structural, the big one): revenue is driven by unpredictable outage activity. FY22→FY25 revenue was flat-to-down — proof the cycle can sit against you for years.
- Valuation / de-rating: 78× trailing and 39× FY26E leave no room for a demand or margin disappointment.
- Rate & housing sensitivity: many residential installs are financed; higher-for-longer rates and soft housing suppress the addressable pool.
- Leverage on a cyclical: net-debt/EBITDA 2.1× is fine at trend earnings but tightens fast if EBITDA falls in a downturn.
- Clean-energy execution: the storage/solar business has been competitive and margin-dilutive; it is optionality, not a proven profit engine.
- No expert corroboration: unlike our conviction names, zero independent voices in the Synthos KB support this thesis — the entire call rests on quant/fundamentals, which lowers conviction by design.
12. Verdict, position sizing & monitoring
Watch. Generac is a genuinely good business — the dominant US home-standby brand with a real grid-resilience tailwind — but three things keep it off the Buy list today: (1) it is a proven weather cyclical whose revenue has been flat-to-down for three years, (2) it is fully priced (78× trailing, 39× FY26E, above the 50-DMA after a huge run) with the 2027–2028 recovery already embedded, and (3) there is no expert conviction in the Synthos KB to corroborate the thesis. The Q1'26 re-acceleration is encouraging, but one quarter into a weather-dependent recovery is not enough to pay this multiple.
- Sizing: Watch — do not initiate a core position here. If you want the cyclical exposure, keep it a small tactical sleeve (≤1–2%) and prefer a lower entry (toward the 200-DMA ~$200 or a demand-driven pullback) rather than chasing near highs.
- Monitoring: re-underwrite on the §10 tripwires; formal re-score at the 2026-07-29 print. A confirmed multi-quarter residential re-acceleration in an active storm season would upgrade this to Buy — Tactical.
- Single biggest risk: the weather. Demand is outage-driven and unpredictable; a calm season deflates the entire recovery narrative.
This verdict is logged as a tracked Synthos call as of 2026-07-03 at $252.66.
Provenance & disclosures
- Traceability: 0 KB claims, breadth 0 — there is no expert coverage for GNRC in the Synthos knowledge base. This deep dive is explicitly fundamentals- and quant-driven, and says so throughout. No conviction is asserted that the data does not support.
- Data as-of: fundamentals 2026-03-31 (Q1'26) · estimates & prices 2026-07-02/03 · no expert claims. Forward figures are analyst consensus (FMP), labeled as estimates.
- Management caveat: management's own forward guidance was not available in machine-readable form (the 2026-04-29 8-K Item 2.02 is cover boilerplate referencing an un-fetched press-release exhibit). We did not fabricate guidance.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").