Generac Surges 7.56% on $670M Trading Volume Ranks 197th in Market Activity

Generac Holdings (GNRC) surged 7.56% on July 31, 2025, with a trading volume of $0.67 billion, ranking 197th in market activity. The company reported Q2 2025 net sales of $1.06 billion, a 6% year-over-year increase, driven by 7% growth in residential product sales and 5% growth in commercial and industrial (C&I) segments. Adjusted EBITDA reached $188 million (17.7% of net sales), up from $165 million in the prior year, while gross profit margin expanded to 39.3% from 37.6%. The firm highlighted a $150 million global backlog for data center backup power solutions, signaling strong demand for its new large megawatt generators.

Key strategic moves included entering the data center market, with international shipments starting in Q3 2025 and domestic shipments expected late in the year. Management emphasized the potential for this segment to become a $1.5 billion opportunity, driven by structural deficits in backup power supply. However, challenges persist in the residential solar market, where policy shifts and reduced incentives are expected to contract demand. Generac noted a 300-400 basis point drag on margins from clean energy initiatives in the first half of 2025 but expressed confidence in turning this segment to positive EBITDA by 2027.

Operational execution improved, with 400 additional industrial dealers (totaling 9,300) and a 12% increase in operating expenses, attributed to higher sales volumes and new product development. Free cash flow for the quarter was $14 million, down from $15 million in the prior year, reflecting higher working capital needs. The company raised its 2025 adjusted EBITDA margin guidance to 18-19%, up from 17-19%, and narrowed net sales growth expectations to 2-5% from 0-7%, citing improved visibility into gross margin expansion and tariff-related cost dynamics.

A strategy of purchasing the top 500 stocks by daily trading volume and holding them for one day generated a 166.71% return from 2022 to July 30, 2025, outperforming the benchmark by 137.53%. This approach leveraged high-liquidity stocks to capture momentum-driven gains, with Generac’s strong earnings and strategic shifts contributing to its performance. The results underscore the effectiveness of liquidity-focused momentum strategies in capitalizing on market trends.