Generac Holdings Warns of Sharper Sales Decline

Generac Holdings stock experienced a downward trend ahead of its opening on Wednesday as the back-up power provider issued a warning regarding a more significant sales decline in the second half of the year. Despite beating revenue expectations, sales decreased by 23% compared to the previous year. However, the company fell short of earnings estimates and left investors disappointed with its guidance.

Q2 Performance and Expectations

In the second quarter, Generac reported adjusted earnings of $1.08 per share, with revenue reaching $1 billion. Analysts had anticipated earnings of $1.16 per share on revenue of $980 million. Unfortunately, the company now expects a net sales decline between 10% and 12% for the full year. This update deviates from its previous guidance, which projected a decline of 6% to 10%. The reason behind the revised forecast is attributed to a "softer-than-expected consumer environment."

Residential Sales Fall Below Expectations

Generac's CEO, Aaron Jagdfeld, commented that residential sales fell below the company's expectations in Q2 due to weakened consumer demand for home improvement. Despite the current circumstances, Jagdfeld remains optimistic about the long-term prospects of backup power solutions, as he believes that the underlying mega-trends driving awareness are still compelling.

Impact on Stock Performance

Generac Holdings' stock has experienced significant growth during 2023, surging by 52% as of the market close on Tuesday. However, following the latest news, premarket trading revealed a 13.2% decrease in stock value, with shares priced at $133.07.