A month has gone by since the last earnings report for Generac Holdings (GNRC). Shares have lost about 10.2% in that time frame, underperforming the S&P 500.
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 latest 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 Q3 Earnings Miss Estimates
Generac reported third-quarter 2025 adjusted earnings per share (EPS) of $1.83, which missed the Zacks Consensus Estimate of $2.25. The company reported adjusted EPS of $2.25 in the prior-year quarter.
Net sales were $1.11 billion, down 5% compared with $1.17 billion reported in the prior-year quarter. The figure also missed the consensus estimate of $1.2 billion. Weaker seasonal demand for home standby and portable generators offset increases in sales for global C&I products and higher shipments of residential energy technology products. Although home standby and portable generator shipments were up sequentially in the quarter, they came in below expectations due to a power outage environment that was considerably below the baseline average, as highlighted by Generac.
As a result of a weak power outage environment, management has revised its expectations for 2025. For 2025, Generac now expects revenues to be flat compared with an increase of 2-5% guided earlier.
Net income margin (before deducting for non-controlling interests) is now expected to be 6% compared with 7.5-8.5% guided earlier. Adjusted EBITDA margin is now estimated to be 17% compared with the previous range of 18% to 19%. Generac now expects free cash flow conversion from adjusted net income to be 80% compared with the previous guided range of 90% to 100%.
Segments in Detail
Segment-wise, domestic revenues fell 8% year over year to $938.1 million. Results were supported by acquisitions, which contributed 1% benefit. Core sales were impacted by lower home standby and portable generator sales, and tough year-over-year comparisons.
International revenues surged 11% year over year to $185.5 million, which includes a 3% favorable impact from foreign currency fluctuations. Core revenue growth was mainly due to strength in C&I product shipments in Europe and initial shipments of large-megawatt generators to data centers.
Product-wise, revenues from Residential were down 13% year over year to $627 million. C&I revenues totaled $358 million, up 9% year over year. Revenues from the Other product class totaled $129.4 million, up 5.3% year over year.
The Zacks Consensus Estimate for Residential and C&I products’ third-quarter revenues was pegged at $714 million and $353 million, respectively.
Margin Performance
Gross profit was $426.9 million, down from $472.3 million in the prior-year quarter, with respective margins of 38.3% and 40.2%. The performance was impacted by unfavorable sales mix, higher tariffs and lower manufacturing absorption, which offset higher price realization.
Total operating expenses were $323.8 million, up 6.7% year over year, caused by certain legal and regulatory charges.
Operating income was $103.1 million, down 38.9% year over year. Adjusted EBITDA, before deducting for non-controlling interests, was $193 million compared with $232 million a year ago.
Cash Flow & Liquidity
In the third quarter, the company generated $118.4 million of net cash from operating activities. Free cash flow totaled $96.5 million.
As of Sept. 30, 2025, Generac had $300 million of cash and cash equivalents, with nearly $1.36 billion of long-term borrowings and finance-lease obligations.
In the reported quarter, the company did not buy back shares. Generac had shares worth $200 million left under its buyback authorization as of June 30, 2025.
In February 2024, Generac approved a new share buyback authorization that allows for a repurchase of up to $500 million in the next 24 months. It replaced the remaining balance on the earlier program.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -25.89% due to these changes.
VGM Scores
At this time, Generac Holdings has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.
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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Generac Holdings has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Generac Holdings is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Dover Corporation (DOV), a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended September 2025 more than a month ago.
Dover reported revenues of $2.08 billion in the last reported quarter, representing a year-over-year change of +4.8%. EPS of $2.62 for the same period compares with $2.27 a year ago.
For the current quarter, Dover is expected to post earnings of $2.48 per share, indicating a change of +12.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
Dover has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Generac Holdings Inc. (GNRC): Free Stock Analysis Report Dover Corporation (DOV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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