Shares of Generac Holdings (GNRC), a maker of backup power systems, are up 14.05% at 3:45 p.m. New York time today, February 16, after the company reported fourth quarter earnings of $2.51 a share after the market close on Tuesday. Revenue hit $1.06 billion. Wall Street had been expecting earnings of $2.42 a share an revenue f $1.02 billion. For the full 2021 fiscal year net sales climbed 50% to a record $3.75 billion. Adjusted earnings were $9.63 a share.
But it was guidance for 2022 that popped the stock. “The company is initiating guidance for 2022 that anticipates another year of exceptional revenue growth as compared to the prior year,” the company in its fourth-quarter earnings release. The company is forecasting an increase in net sales of 32% to 36% for 2022 from 2021. Net income margin was forecast at 13% to 14$ for 2022.
Sales growth will come from an increase in standby power production capacity, goth in clean energy markets, recent acquisitions, and strong demand in global markets.
The one fly in the ointment was a slight but expected drop in gross profit margin to 34% in the fourth quarter, down from 39.4% in the fourth quarter of 2020. The lower margins were a result of constraints in the supply chain and inflation in the price of commodities, logistics, and labor. Higher costs, including those to expand production, were partially offset by price increases introduced last year and will be rolled out farther in 2022.
The stock’s performance today still leaves the position I initiated in my Jubak Picks Portfolio down 28.67% since November 8, 2021.
