What to Expect Ahead of Generac Holdings' Q4 Earnings Release?

Generac Holdings Inc. GNRC will report fourth-quarter 2025 results on Feb. 11, before the market opens. 

The Zacks Consensus Estimate for revenues is pinned at $1.17 billion, down 5.2% from the prior-year reported number. 

The consensus estimate for earnings is pinned at $1.81 per share, down 35.4% year over year. The estimate has gone down 3 cents in the past 60 days.

GNRC’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, delivering an average surprise of 11.2%. 

In the past year, shares of the company have gained 26.6% compared with the Zacks Manufacturing-General Industrial industry’s growth of 18.8%.

Factors at Play Ahead of GNRC’s Q4 Results

Continued pressure in residential demand due to a weak power outage environment is likely to have affected fourth-quarter revenues. 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. Residential product sales are expected to decline by a mid-single-digit percentage for the year. 

However, strength in residential energy technology solutions bodes well. In the last reported quarter, Residential energy technology’s growth was largely driven by Puerto Rico’s energy grant-related program, which is expected to drive growth in the fourth quarter as well. 

Management expects ecobee business to report a positive EBITDA contribution for the full year 2025, supported by strong sales growth and cost discipline. Ecobee’s installed base was 4.75 million connected homes at the end of the third quarter, driving higher-margin recurring revenues from energy services and subscriptions, which is likely to continue to support fourth quarter results.

New product launches within the Residential segment are expected to have driven the top-line expansion. In the third quarter, the company made its first shipments of a next-generation home standby product line with continued rollouts into the fourth quarter. It will begin to ship higher-end products in this line, including a 28-kilowatt air-cooled home standby generator. The company has started shipping its next-gen residential energy storage system, the PWRcell 2.0. 

The Zacks Consensus Estimate for the fourth quarter of Residential products' revenues is pegged at $643 million. 

Generac Holdings Inc. Price, Consensus and EPS Surprise

Generac Holdings Inc. price-consensus-eps-surprise-chart | Generac Holdings Inc. Quote

Improving Commercial & Industrial (“C&I”) sales is likely to have acted as a primary tailwind. For 2025, C&I sales are now projected to be up in mid-single digits. The consensus estimate for C&I products' revenues is pinned at $394 million. In the last reported quarter, C&I revenues totaled $358 million, up 9% year over year, driven by increased shipments to domestic industrial distributors and telecom customers, as well as growth in Europe and shipments of large megawatt generators to data centers. 

Management expects its entry in the data-center vertical to be a strong business opportunity in the long term for the C&I segment amid accelerating investment in data centers and the proliferation of artificial intelligence. In the third quarter, the company has built a global backlog of more than $300 million. Generac shipped its first international shipments to a client in Australia and domestic shipments began in October, with the majority of the backlog expected to ship in 2026. It anticipates strong sequential growth in sales to the data center end market in the fourth quarter.

Generac expects the sales mix shift toward C&I, new product transition and C&I plant start-up costs to have an unfavorable impact on gross and adjusted EBITDA margins for 2025 compared with its previous guidance. Gross margin is projected to be approximately flat to slightly down compared with 2024. 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%. Despite this, free cash flow is still projected to total approximately $300 million for 2025, providing flexibility for growth investments. 

Volatile macroeconomic conditions, including tariff troubles, stiff competition and increasing operating costs (mainly due to higher marketing spending), remain additional concerns for Generac.

What Does Our Model Unveil for GNRC?

Our proven model does not predict an earnings beat for Generac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

Generac has an Earnings ESP of -13.93% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three stocks you may want to consider, as our model shows that these have the right elements to post an earnings beat in this reporting cycle.

Watts Water Technologies WTS currently has an Earnings ESP of +0.59% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. 

WTS is scheduled to report quarterly earnings on Feb. 11. The Zacks Consensus Estimate for WTS’ to-be-reported quarter’s earnings and revenues is pegged at $2.36 per share and $611.3 million, respectively. Shares of Watts Water have gained 52.9% in the past year.

Applied Materials AMAT has an Earnings ESP of +3.06% and a Zacks Rank #2 at present. AMAT is scheduled to report quarterly figures on Feb. 12. The Zacks Consensus Estimate for AMAT’s to-be-reported quarter’s earnings and revenues is pegged at $2.19 per share and $6.89 billion, respectively. Shares of Applied Materials have gained 75.6% in the past year.

Expedia Group EXPE has an Earnings ESP of +4.39% and a Zacks Rank #2 at present. It is scheduled to report quarterly figures on Feb. 12. The Zacks Consensus Estimate for EXPE’s to-be-reported quarter’s earnings and revenues is pegged at $3.44 per share and $3.4 million, respectively. Shares of Expedia have gained 16.7% in the past year.


 

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

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