GNRC - Embedded Expectations Analysis - 2021 12 13
Generac Holdings Inc. (GNRC) currently trades at a historical high relative to Uniform earnings, with a 34.5x Uniform P/E (Fwd. V/E').At these levels, markets are pricing in expectations for Uniform ROA to expand to 53%, accompanied by 13% Uniform asset growth.
Meanwhile, analysts expect Uniform ROA to only improve to 41% by 2022, albeit with much stronger 30% Uniform asset growth.
Given the firm's potential to benefit from massive tailwinds, there is fundamental potential for stronger-than-priced-in performance.
If the company can execute on its strategy, it could drive Uniform ROA to 61% with 20% Uniform asset growth going forward, which would imply a stock price closer to $648, representing approximately 50% equity upside.
Moreover, the firm's most recent earnings call suggests management is confident about business momentum, footprint expansion, and acquisitions.
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.