Generac Holdings (GNRC) Down 5.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Generac Holdings (GNRC). Shares have lost about 5.4% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Generac Holdings due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Generac Holdings Inc. before we dive into how investors and analysts have reacted as of late.

Generac Q4 Earnings Miss Estimates

Generac has reported fourth-quarter 2025 adjusted earnings per share (EPS) of $1.61, which missed the Zacks Consensus Estimate of $1.81. Generac had registered an adjusted EPS of $2.80 in the prior-year quarter.

Net sales were $1.09 billion, down 12% from $1.23 billion in the prior-year quarter. The figure also missed the consensus estimate of $1.17 billion.

Weaker demand for home standby and portable generators amid a softer outage environment offset increases in sales to data center customers and higher shipments of residential energy technology products. Management added that the momentum in the data center market was a big plus and that increasing supplies to key hyperscalers should drive the backlog over the next few quarters.

Generac noted that it is focused on capacity expansion for large megawatt generators and has purchased an additional manufacturing facility in Wisconsin in the fourth quarter, while continuing with investments in the existing facilities. It expects these initiatives to lead to a doubling of C&I product sales in the coming years.

For 2026, Management expects revenues to grow in the mid-teens percent range compared with the sales decline of 2% registered in 2025. This includes a 1% favorable impact from the net effect of foreign currency, and completed acquisitions and divestitures. Driven by data center momentum and the Allmand acquisition, C&I product sales are anticipated to increase in the 30% range.

Assuming a return to power outage activity in line with the longer-term baseline and subsequent higher home standby generator price realization and higher shipments, 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 18-19%.

Segments in Detail

Segment-wise, domestic revenues fell 17% year over year to $889 million. Sales were impacted by lower home standby and portable generator sales and tough year-over-year comparisons.

International revenues rallied 12% year over year to $209.2 million, which includes a 6% favorable impact from foreign currency fluctuations. Core revenue growth was mainly due to strength in large-megawatt generators to data centers and higher shipments for the controls product offering.

Product-wise, revenues from Residential were down 23% year over year to $572 million. C&I revenues totaled $400 million, up 10% year over year. Revenues from the Other product class totaled $120.1 million, down 6.2% year over year.

The Zacks Consensus Estimate for Residential and C&I products’ fourth-quarter revenues was pegged at $643 million and $394 million, respectively.

Margin Performance

Gross profit was $396.1 million, down from $501.4 million in the prior-year quarter, with respective margins of 36.3% and 40.6%. The performance was impacted by an unfavorable sales mix and a certain inventory provision in the current quarter. Higher price realization mostly offset increased input costs and lower manufacturing absorption.

Total operating expenses were $405.4 million, up 34% year over year, caused by provision for the settlement of a legal matter.

The operating loss was $9.3 million compared with the operating income of $198 million in the prior-year quarter. Adjusted EBITDA, before deducting for non-controlling interests, was $185 million compared with $265 million a year ago.

Cash Flow & Liquidity

In the fourth quarter, the company generated $189 million of net cash from operating activities. The free cash flow totaled $130 million.

For 2025, the company generated $438 million of net cash from operating activities. The free cash flow totaled $268 million compared with the guidance of approximately $300 million.

As of Dec. 31, 2025, cash and cash equivalents were $341.4 million, with $1.26 billion of long-term borrowings and finance-lease obligations.

In 2025, the company repurchased 1.1 million shares for $148 million. Management also 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?

Since the earnings release, investors have witnessed a upward trend in fresh estimates.

VGM Scores

At this time, Generac Holdings has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of C. 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 indicates a downward shift. Interestingly, Generac Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Generac Holdings belongs to the Zacks Manufacturing - General Industrial industry. Another stock from the same industry, Trimble Navigation (TRMB), has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Trimble reported revenues of $969.8 million in the last reported quarter, representing a year-over-year change of -1.4%. EPS of $1.00 for the same period compares with $0.89 a year ago.

Trimble is expected to post earnings of $0.71 per share for the current quarter, representing a year-over-year change of +16.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Trimble. Also, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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