GNRC - Embedded Expectations Analysis - 2021 03 29
Generac Holdings Inc. (GNRC:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 32.6x Uniform P/E, implying somewhat bullish expectations for the firm. However, given management's excitement about the power generation market and confidence about DER asset value proposition and their new Trenton facility, market expectations are still overly pessimistic, suggesting long-term equity upside remains warrantedSpecifically, management generated an excitement market when stating their investments in integration activities are beginning to produce results in the rapidly growing power generation market. Additionally, management is confident net sales for other products and services grew by 24%, that they are improving the value proposition of their Distributed Energy Resource (DER) assets, and that their products and services have been essential during the pandemic. Moreover, they are confident the completion of the Trenton facility will expand home standby generator capacity by 75% and that they will benefit from the California mandate of requiring 72 hours of backup power for cell towers
Given management's excitement about the power generation market and confidence about DER asset value proposition and their new Trenton facility, market expectations are still overly bearish, suggesting long-term equity upside remains warranted for GNRC
Generac Holdings is a designer and manufacturer of a range of power generation equipment and other power products serving the residential, light commercial and industrial markets. The company's products include residential, commercial and industrial standby generators, as well as portable and mobile generators used in a range of applications. Other engine powered products that the company designs and manufactures include light towers which provide temporary lighting for various end markets; commercial and industrial mobile heaters and pumps used in the oil and gas, construction and other industrial markets; and a product line of outdoor power equipment for residential and commercial use.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.