Generac Holdings Inc (NYSE: GNRC) is down nearly 25% on Wednesday after the maker of backup power generators reported its preliminary results for the third quarter that came in well below the Street estimates.
Generac attributed the weakness primarily to residential sales. In the press release, CEO Aaron Jagdfeld said:
Installation capacity for home standby generators continued to grow but still lagged our production output during Q3. This has resulted in higher field inventory and lower home standby generator orders from our channel partners than previously expected even as end customer demand continues to be strong driven by elevated power outages, most notably from Hurricane Ian.
Including the price action in response to this stock market news, Generac shares are down nearly 70% versus the start of 2022.
The stock was weighed also because the management lowered its future outlook. Generac now forecasts up to 24% increase in sales this year and 9.0% to 10% net income margin. Its previous guidance was as much as 40% annualised growth in sales and 13% to 14% net income margin.
Heading into the earnings print, Wall Street had a consensus “buy” rating on Generac shares. The average price target on Wisconsin-headquartered firm sits at $302 – more than a 150% upside from here.
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