Leading standby generator and energy storage specialist Generac (GNRC +16.49%) saw its shares rise 17% as of 2 p.m. ET on Wednesday after the company smashed first-quarter earnings expectations. Generac grew Q1 sales and adjusted earnings per share by 13% and 43%, while raising its 2026 sales guidance from mid-teens growth to a mid-to-high-teens increase. While these figures are impressive enough, it was Generac's backlog that stole the show, in my opinion, and helped spark today's soaring share price.
NYSE: GNRC
Key Data Points
The company's backlog surpassed $700 million -- up $300 million from the last quarter -- and this doesn't include a $600 million nonbinding notice to proceed from a hyperscale customer. This booming backlog is particularly important for investors to see, as it suggests that Generac's expansion into providing generators to global data center customers is accelerating. Reinforcing this notion, management projects that this burgeoning Commercial and Industrial (C&I) segment will grow by 25% to 30% -- up from 20% to 25% last quarter.
Image source: Getty Images.
With total power outage hours in the U.S. up 80% since 2015, and electricity consumption and pricing projected to soar through 2030, Generac's market-share-leading combination of Residential and C&I products is quickly becoming mission-critical. This notion is especially true for data center customers in Generac's C&I unit, who cannot afford downtime as AI and machine learning become commonplace. Chief Executive Officer Aaron Jagdfeld spoke to the opportunity for Generac, saying, "If retail electricity prices continue to rise, and things like storage costs and electronics costs continue to come down, we're going to see strong demand for these products in the long run."
Despite Generac's share price more than doubling over the last year, the stock's forward price-to-earnings ratio of 30 isn't outrageous considering the company's growth potential and track record of success. Generac is a 24-bagger since its initial public offering in 2010 and looks poised to continue outperforming, provided it can capitalize on the data center industry's boom.
