Generac Slides on Downgrade

Generac (NYSE:GNRC) shares pointed downward Tuesday after Jefferies downgraded the stock to “underperform” from “hold,” citing the potential impact of electric vehicle bidirectional charging on sales of Generac’s backup power products.

Generac reported weak results recently, with a 15% decline in sales, and 26% lower earnings per share. The weakening macro environment, with inflation and rising interest rates, is pressuring Generac buyers, including industrial users and homeowners interested in its power backup products. It also reported a customer in the clean energy space has filed for bankruptcy, and it took almost $40 million in warranty-related costs in the quarter. Add it all together, and investors have been very downbeat.

A piece in a recent Motley Fool pointed out that Generac has been a solid performer, “but it faces disruption from renewable energy and energy storage technologies; it's making a pivot, but is playing defense and could struggle to be the same market beater it has been in the past.”

The quarter's top- and bottom-line results and the company's significantly lowered full-year guidance were in line with the preliminary results it released on Oct. 19. In other words, the key numbers didn't come as a surprise to investors who follow the company. Wednesday's report, however, contained much more data.

GNRC shares plunges $2.73, or 2.7%, to $99.33.