Generac Stock Trades at Higher Earnings Multiple Despite Slower Growth Than Peers
Generac (GNRC) trades at a significantly higher earnings multiple than its five peers, despite trailing in revenue growth and operating margin. While companies like AZZ trade at lower multiples with better performance metrics, investors are paying for future potential tied to Generac's data center order book expected to ship largely in 2027. The company has secured a $1.6 billion backlog of orders, including a new long-term agreement worth about $2.4 billion over the next two years with Amazon. Management is also working on tripling production capacity for large megawatt generators within twelve months to meet demand from these contracts. Generac's 2026 guidance includes high teens sales growth and nearly $450 million in data center revenue, though its residential segment faces slower growth due to soft power outages. The stock’s premium valuation is a bet on the company delivering on this future pipeline. If production or delivery timelines slip, the current multiple may not be justified.
