It has been about a month since the last earnings report for Generac Holdings (GNRC). Shares have added about 7.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Generac Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
Generac Tops Q1 Earnings Estimates
Generac reported first-quarter 2026 adjusted earnings per share (EPS) of $1.80, which beat the Zacks Consensus Estimate of $1.33. Adjusted EPS was $1.26 in the prior-year quarter.
Net sales were $1.06 billion, up 12% from $942 million in the prior-year quarter. The figure also beat the consensus estimate of nearly $1.044 billion. Strength in the Commercial & Industrial (“C&I”) segment, especially the data center market, acted as a catalyst. Generac added that it was in the final stages of vendor approval with several hyperscale customers. It has also expanded the backlog for these products with both current and new customers. The Enercon buyout (completed earlier this month) is expected to boost the company’s vertical integration and support margin expansion for megawatt backup power offerings.
Given the strong first-quarter performance and momentum in the data center market and increasing backlog, Generac now expects 2026 revenues to increase in the mid-to-high teens percent range. This includes a 2% positive impact from the net effect of foreign currency, acquisitions and divestitures. The earlier growth target was in the mid-teens percent range.
C&I product sales are anticipated to increase in the mid-to-high 20% range compared with the earlier target of low-to-mid 20% range. Residential product sales are expected to increase in the 10% range for 2026.
The net income margin (before deducting for non-controlling interests) is expected to be between 8% and 9%. The adjusted EBITDA margin is estimated to be 18.5-19.5% as compared with the earlier guided range of 18-19%.
Segments in Detail
Beginning from the first quarter of 2026, Generac’s two reportable segments are now Residential and C&I.
The Residential segment consists of the former Domestic segment minus the domestic C&I operations. The C&I segment consists of the former International segment, plus the domestic C&I operations.
Revenues from Residential were up 1% year over year to $552.2 million, driven by higher portable generator shipments, partially offset by reduced energy storage system sales. Sales of home standby generators remained unchanged from the prior-year quarter as higher pricing offset reduced volumes.
C&I revenues totaled $510.1 million, up 28% year over year. This included 10% net favorable impact from the combination of acquisitions, divestitures and foreign currency. The core revenue growth for the segment was driven by higher sales to data center customers and shipments to domestic industrial distributors and rental channels. Increasing sales of the control solutions to the power generation vertical acted as another tailwind.
The Zacks Consensus Estimate for Residential and C&I products’ first-quarter revenues was pegged at $518 million and $439 million, respectively.
Margin Performance
Gross profit was $410.2 million, up from nearly $372 million in the prior-year quarter, with respective margins of 38.7% and 39.5%. The margin performance was impacted by an unfavorable sales mix, which offset higher price realization.
Total operating expenses were $292.9 million, up 2% year over year, caused by higher intangible amortization.
The operating income was $117.3 million compared with $83.6 million in the prior-year quarter. Adjusted EBITDA, before deducting for non-controlling interests, was $193 million compared with $150 million a year ago.
Cash Flow & Liquidity
In the first quarter, the company generated $119 million of net cash from operating activities. The free cash flow totaled $90 million.
As of March 31, 2025, cash and cash equivalents were $265.5 million with $1.25 billion of long-term borrowings and finance-lease obligations.
The company did not buy back stock in the first quarter. In 2025, the company repurchased 1.1 million shares for $148 million. Management also earlier approved a share repurchase authorization of up to $500 million over the next 24 months. This new program replaces the remaining balance of the earlier program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, Generac Holdings has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Generac Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Generac Holdings Inc. (GNRC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).