What happened

Leading home generator supplier Generac Holdings (GNRC 2.00%) warned investors about its upcoming third-quarter results today, and the stock plunged in early trading. As of 11 a.m. ET, Generac shares were down 21.9%. That pushed the stock down more than 75% from its highs just one year ago. 

So what

The leading provider of home backup generators said its revenue grew 15% compared to last year to more than $1 billion in the third quarter. However, that was shy of the company's own expectations. Net income was also hit with a charge of $18 million due to a customer in the clean energy sector ceasing operations and filing for bankruptcy. But the company's more meaningful issue is its residential customer sales. 

Now what

Generac president and CEO Aaron Jagdfeld said shipments of its commercial and industrial products were in line with expectations. But while demand was still on the rise for its residential home standby generators, it didn't keep up with production, and inventories spiked. That mismatch of supply and demand came despite elevated power outages, including from Hurricane Ian. 

This forced the company to reset expectations for the full year. It now sees net sales growth of 23% at the midpoint of its guidance range, down from the previous 38%. The company said it expects it to take at least through the middle of 2023 before surplus inventories are worked through. 

Investors who may have been interested in this once-highflier but thought the stock may be too expensive should take another look. Shares that began the year with a price-to-earnings (P/E) ratio above 40 can now be had for a P/E of below 15, even with the lowered results. As long as the trend in demand continues to grow, that may look like a bargain over the long term.