Generac: Analyst Day Financial Targets Better Than Expected, but Are They Achievable?

We maintain our $110 fair value estimate for Generac GNRC after attending its analyst day in Wisconsin. We view shares as fairly valued.

The overall theme of Generac’s analyst day was its continued evolution toward clean energy. Generac expects energy technology revenue to increase to 21% of sales in 2026 from 12% in 2023.

Consistent with past practice, Generac unveiled three-year financial targets that were above our expectations. The company expects 2026 revenue of $5.85 billion, above our $5.1 billion estimate. In addition, 2026 adjusted EBITDA margins of 22% (midpoint) surpassed our 19.5% estimate. The main upside surprise relative to our estimates was the company’s expectation for continued growth in its home standby generator sales beyond an inventory normalization bump in 2024. In contrast, we assume a plateau of home generator sales beyond 2024 as we hesitate to underwrite a major outage event in our base estimates. As such, our revised 2026 revenue estimate ($5.2 billion) remains below the company’s target. We stress home standby sales are inherently difficult to forecast and remain highly dependent on power outage activity, which represents a key upside to our estimates.

Generac remains committed to its upstart clean energy business despite recent setbacks. We view the appointment of solar veteran Norm Taffe as adding credibility to its clean energy efforts, but ultimate success remains far from certain. In the near term, the company is focused on the development of its next-generation storage and solar offerings, which are expected in late 2024 and early 2025, respectively.