Generac Stock Is Rising. Strong Earnings Aren’t the Only Reason.

Generac beat second-quarter earnings estimates, and raised guidance. (Dreamstime)

Backup-power-technology company Generac Holdings reported better-than-expected quarterly earnings, and raised full-year financial guidance.

That’s the kind of quarter investors love.

The company announced second-quarter earnings per share of $1.65 on sales of $1.1 billion on Wednesday morning. Wall Street was looking for earnings per share of $1.32 on sales of $1.1 billion, according to FactSet. A year ago, in the second quarter of 2024, Generac reported earnings per share of $1.35 on sales of $1 billion.

Along with topping Street earnings estimates, Generac raised full-year financial guidance. Generac’s margin for adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, is now expected to be 18% to 19%. The prior range was 17% to 19%.

Sales growth is now expected to land from 2% to 5% compared with 2024. The prior guidance range was wider, from 0% to 7%.

Wall Street currently projects sales growth of about 3%, and Ebitda margins of about 18%.

Investors look pleased. Generac shares were up 2.4% at $155 in early trading, while the S&P 500 and Dow Jones Industrial Average were up 0.2% and 0.1%, respectively.

Coming into Wednesday trading, shares were down about 2% year to date, and down 3% over the past 12 months. Falling sales estimates have weighed on investor sentiment. Wall Street projects 2025 sales of $4.4 billion. A year ago, that estimate was closer to $4.6 billion.

Things are looking up, though. “Sales of residential energy technology solutions exceeded expectations and increased at a dramatic rate from the prior year,” said CEO Aaron Jagdfeld in a news release. “We continued to take share in the portable-generator market while also holding a new and higher baseline level of demand for home standby generators following strong [power] outage activity in the second half of last year.”

Power outages tend to drive interest in home standby generators.

Residential sales in the quarter were about $574 million. Wall Street projected about $557 million, according to FactSet. That was down from peak quarterly sales levels of almost $900 million reached in the second quarter of 2022, but up from $538 million a year ago.

Write to Al Root at allen.root@dowjones.com