What happened
Leading home backup-generator manufacturer Generac Holdings (GNRC 0.51%) reported its second-quarter 2021 results today, and there were several areas of good news. But investors still sold off the stock this morning, with shares down as much as 13% early in the session. The stock recovered some, however, and shares were down about 7% as of 11:45 a.m. EDT on Wednesday.
So what
Generac exceeded analyst estimates with sales of $920 million, which was 68% above the prior-year period. Earnings were also above expectations with adjusted net income of $2.39 per share versus $2.35, according to Zack's consensus estimate. But investors had already pushed shares up 93% year to date ahead of this report, based on strong demand driven by severe weather events and planned utility power outages.
Image source: Getty Images.
Now what
CEO Aaron Jagdfeld said in a statement, "Shipments of home standby generators were almost double compared to the prior year due to incredible demand for these products and our successful capacity-expansion efforts." He also noted that the popularity of the company's battery storage system that uses solar energy continues to accelerate.
The strength in the business prompted management to increase 2021 guidance for sales growth to a range of 47% to 50% compared to 2020. Prior guidance had a midpoint for growth of 42.5%.
Today's stock move seems to be nothing more than a "sell the news" reaction. Even with the drop, shares are up more than 80% so far in 2021. Long-term shareholders should be happy with today's report, and the intraday recovery in shares may reflect that thinking.
