Track market-moving stories before they get noisy

A month has gone by since the last earnings report for Generac Holdings (GNRC - Free Report) . Shares have added about 2.8% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Generac Holdings due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Generac Holdings Inc. before we dive into how investors and analysts have reacted as of late.

Generac Tops Q2 Earnings EstimatesGenerac reported second-quarter 2026 adjusted earnings per share (EPS) of $2.91, which beat the Zacks Consensus Estimate of $1.95. The company had registered an adjusted EPS of $1.65 in the prior-year quarter.

Net sales were $1.173 billion, up 11% from $1.06 billion in the prior-year quarter. The figure missed the consensus estimate by 0.4%.

Strength in the Commercial & Industrial (“C&I”) segment, particularly the data center market, remained the key catalyst, along with a $71 million pre-tax benefit from tariff refunds.

Generac still expects full-year 2026 net sales growth in the mid-to-high teens, including an approximately 2% favorable contribution from foreign currency, acquisitions and divestitures. C&I sales are projected to grow in the low-30% range, while Residential sales are forecasted to increase in the high-single-digit range.

However, the net income margin before noncontrolling interests is now forecasted at 9-10%, above the previous 8-9% range. Adjusted EBITDA margin is now expected at 20-21%, up from the prior range of 18.5-19.5%. The tariff refund recorded in the second quarter should add about 1.5% to the full-year margin.

C&I Momentum AcceleratesC&I revenues totaled $556.5 million, up 29% year over year, while the data center backlog reached about $1.6 billion. This included a 6% net favorable impact from the combination of acquisitions, divestitures and foreign currency. Core growth came from the data center market, while higher rental and telecom shipments more than offset weaker domestic industrial distributor shipments.

Generac also highlighted a global supply agreement with a hyperscale data center client that it signed during the quarter and added that, with the recent finalization of product-specific terms, the commitment is nearly $700 million of volume for 2027. It has also secured a global supply agreement with a second hyperscale customer and is currently holding negotiations for final product-specific terms for 2027 and 2028 volumes. Notably, the data center backlog excludes committed volumes from the second hyperscale customer.

During the quarter, Generac completed the Enercon acquisition. It purchased an additional facility in Belvidere, IL, to support large-megawatt generator packaging.

Revenues from Residential were down 2% year over year to $621.3 million. Lower energy storage system and portable generator shipments drove the decline, largely offset by higher home standby generator sales.

Tariff Refund Lifts ProfitabilityGross profit increased to $521.8 million from $416.7 million, and gross margin widened to 44.5% from 39.3%. Tariff refunds added roughly 6% to gross margin. Favorable pricing partly offset unfavorable sales mix and higher input costs.

Operating expenses increased 2% to $311.4 million, reflecting investments to support C&I growth and higher intangible amortization, partly offset by lower legal expenses. Operating income advanced 88.2% to $210.4 million. Adjusted EBITDA reached $290.7 million, or 24.8% of sales, compared with $187.6 million, or 17.7%, a year earlier.

Cash Flow and Balance SheetNet cash provided by operating activities increased to $121.2 million from $72.2 million in the year-ago quarter. Free cash flow rose to $62.9 million from $14.5 million in the year-ago quarter, supported by higher operating earnings, particularly cash receipts from tariff refunds.

At June 30, 2026, cash and cash equivalents totaled $264.9 million, down from $265.5 million as of March 31. Long-term borrowings and finance lease obligations were $1.25 billion.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.

VGM ScoresAt this time, Generac Holdings has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Generac Holdings has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Key Takeaways Generac's data center backlog hit $1.6 billion, including $1 billion of new orders received within 90 days.Two hyperscaler deals include nearly $700 million of committed 2027 volume with Generac's first customer.GNRC expects about $450 million in 2026 data center revenue, making capacity and margin execution critical. Generac Holdings Inc. (GNRC - Free Report) has built a data center backlog of roughly $1.6 billion, including about $1 billion of new orders received within 90 days. The scale of those commitments is reshaping the company’s commercial and industrial (“C&I”) growth outlook.

The opportunity also raises the operational stakes. Generac must add capacity, deliver large-megawatt systems on schedule and manage a sales mix that produces lower margins than its residential business.

Generac’s Backlog Reaches $1.6 BillionThe backlog shows that data centers are becoming a substantial source of future demand rather than a limited near-term contributor. It supports a broader shift toward commercial and industrial customers with multiyear power requirements.

The $1.6 billion figure does not include committed volumes that remain under negotiation with Generac’s second hyperscale customer. That leaves room for additional orders, but the timing and final product terms still need to be completed.

GNRC’s Hyperscaler Deals Extend Revenue VisibilityGenerac has secured two multiyear global supply agreements with hyperscale data center operators. The agreements strengthen visibility beyond the current year and give the company a clearer basis for production planning.

Finalized product-specific terms with the first customer represent nearly $700 million of committed volume for 2027. Negotiations with the second customer cover potential volumes for 2027 and 2028, extending the opportunity further into the planning cycle.

Generac’s 2026 Data Center Outlook Moves HigherManagement raised its 2026 data center revenue expectation to roughly $450 million. The higher forecast indicates that backlog conversion should become a more meaningful contributor to Generac’s near-term C&I revenues.

Multiyear agreements may also reduce reliance on shorter-cycle orders. Manufacturing readiness and final product terms remain important to the pace of revenue conversion.

GNRC’s Capacity Expansion Becomes the Key TestProduction at the expanded Sussex, WI, facility is expected to begin in the third quarter of 2026, one quarter ahead of plan. The Belvidere, IL, packaging facility is scheduled to become operational in the first quarter of 2027.

Caterpillar Inc. (CAT - Free Report) supplies electric power systems for data centers, making it a relevant comparison as Generac expands large-megawatt capacity. Cummins Inc. (CMI - Free Report) also provides standby generator solutions for hyperscale, colocation and enterprise facilities.

Their presence highlights the need for reliable execution and service support. Delays, inefficient ramp-ups or missed delivery schedules could prevent GNRC from converting its backlog into revenues when expected.

Generac’s C&I Mix Could Limit Margin UpsideTariff refunds added roughly 6% to second-quarter gross margin, which reached 44.5%. Excluding those refunds, management expects 2026 gross margin near the low end of its prior 38.5% to 39.5% range because of the higher C&I sales mix.

GNRC’s Strong Signal Meets a Mixed Style ProfileThe backlog materially improves Generac’s revenue visibility, but the investment case now depends more heavily on capacity execution and margin control. Successful conversion could support a more durable growth mix, while delays would expose the cost of expanding ahead of demand.

GNRC currently carries a Zacks Rank #1 (Strong Buy), indicating favorable near-term earnings-estimate trends. Its Growth Score of B is consistent with the company’s expanding growth opportunity.

The Value Score of D, Momentum Score of C and VGM Score of C remain mixed. Those scores suggest that the data center theme is promising, but investors still need evidence that backlog can translate into profitable, timely revenue growth.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Generac (NYSE:GNRC | GNRC Price Prediction) Chairman, President and CEO Aaron Jagdfeld used a July 29 CNBC interview to frame the company’s data center order flow as the leading edge of a multi-year infrastructure cycle. “We booked over $1 billion worth of new orders for data centers, specifically for data centers, in the last 90 days. And that kind of pace is unlike anything we’ve ever seen before,“ Jagdfeld said.

He tied that pace to a longer runway: “The planning is in place, the developments are underway in many cases, and the capital is committed or being raised today. All indications are that at least for the next 5-7 years and maybe longer, that this buildout phase is going to take place.“

Generac’s $1.6 Billion Backlog Confirms the Data Center Pivot Generac’s second quarter showed the mix shift Jagdfeld has been telegraphing for years. Q2 earnings came in at $2.91 per share against consensus of $2.01, with revenue of $1.17 billion, up 10.59% year over year. The commercial and industrial segment grew 29% to $556 million, while the residential segment slipped 2% to $617 million. Reported gross margin expanded to 44.5%, aided by roughly $71 million in pre-tax tariff refunds that added about 6 percentage points to the quarter’s gross margin.

Total data center backlog reached approximately $1.6 billion, a figure that, per Jagdfeld’s Q2 release, “does not include any committed volumes from the second hyperscale customer.” A global supply agreement with a second hyperscale customer was signed during the quarter, layered on top of a first hyperscale relationship that has nearly $700 million committed for 2027 volume.

Generac Is Rapidly Transforming Beyond Residential Power Jagdfeld described the strategic pivot in blunt terms: “We used to be about 65% residential, one third C&I, and now we’re closing in on more of a 50-50 balance.” He explained the rationale by contrasting revenue durability: “The residential business, as much as we love it, is dependent on kind of exogenous events and with the weather events and things that happen. And so it’s a little bit outside of our control.“

The capital deployment supports that thesis. Generac closed the Enercon acquisition to expand its large megawatt generator packaging, added a Belvidere, Illinois, manufacturing facility, and picked up Allmand for mobile power. Capital expenditures nearly doubled to $58.29 million in the quarter as capacity was pulled forward.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Generac didn't make the cut. Grab the names FREE today.

Higher Margins and 30% C&I Growth Strengthen the Bull Case Management held to full-year 2026 net sales growth guidance in the mid-to-high teens %, with C&I growth projected in the low 30% range. Raised profitability guidance now calls for an adjusted EBITDA margin of 20.0% to 21.0%, lifted from a prior 18.5% to 19.5% band. The stock traded up 5.5% on the report and is up 51% year-to-date with the stock trading at $194.19 today.

Sell-side positioning reflects the tension between the backlog signal and cyclical concerns. Analysts’ consensus price target is $293.75, with 13 buy or strong buy ratings against 6 holds and 1 strong sell. Shares trade at roughly 23x forward earnings, a discount to the trailing multiple of 63x that reflects the compounding earnings power investors are underwriting.

The Next Hyperscale Contract Could Unlock Another Leg of Growth CEO Jagdfeld has staked Generac’s growth thesis on a data center buildout cycle that could run through the end of the decade. The next major signal will be whether the second hyperscale customer’s committed volumes enter the backlog and whether Generac can expand capacity without sacrificing margins.

With more than $1 billion in new data center orders booked in just 90 days, a $1.6 billion backlog and contract structures already locking in 2027 demand, the near-term visibility strongly supports Jagdfeld’s multi-year infrastructure thesis.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Generac didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

Key Takeaways Generac's Q2 sales and earnings estimates imply year-over-year growth of 11% and 18.2%.Data center demand and hyperscale opportunities are expected to power C&I growth in the quarter.Q2 adjusted EBITDA margin is expected near 18%, with faster improvement projected later in 2026. Generac Holdings Inc. (GNRC - Free Report) will report second-quarter 2026 results on July 29, before the market opens.

The Zacks Consensus Estimate for revenues is pinned at $1.18 billion, up 11% from the prior-year reported number. The consensus estimate for earnings is $1.95 per share, up 18.2% year over year. The estimate has remained unchanged in the past 60 days.

GNRC’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average surprise of 7.4%.

Price Performance
Image Source: Zacks Investment Research

In the past year, shares of the company have gained 34.1% compared with the Zacks Manufacturing-General Industrial industry’s growth of 3.5%.

Factors at Play Ahead of GNRC’s Q2 ResultsGenerac entered second-quarter 2026 against a backdrop of increasing momentum in its Commercial & Industrial (C&I) segment, driven by robust data center demand, while Residential trends remain more back-half weighted.

Management guided to second-quarter consolidated net sales growth of approximately 9% to 10% year over year, with growth entirely driven by the C&I segment. On the last earnings call, the company highlighted that it was in the final stages of vendor approval with two hyperscale customers. It has also been witnessing backlog expansion for these products with both current and new customers.

Generac’s data center backlog reached more than $700 million at the first quarter-end, representing a roughly $300 million increase since mid-February and providing visibility into 2027 deliveries. Importantly, this number excludes a nonbinding notice to proceed for $600 million in hyperscale data center deliveries expected in 2027, indicating substantial upside potential as the pipeline converts into firm orders. The company has been focused on capacity expansion for large megawatt generators to support accelerating demand.

Within the Residential segment, meaningful growth is skewed toward the second half of 2026, driven by home standby generator, supported by easier comparisons.

Within residential energy technology, ecobee has been emerging as a strategic asset, with more than 5 million connected homes and increased energy services and subscription sales. With the integration of PWRcell 2, PowerMicro microinverter and next-gen standby generators with ecobee, Generac aims to create a differentiated residential energy ecosystem.

Generac expects second-quarter adjusted EBITDA margins to be 18%, representing modest year-over-year expansion. Margin improvement is expected to accelerate in the back half of the year, driven by operating leverage on higher volumes and contributions from the Enercon acquisition.

Nonetheless, volatile macroeconomic conditions, including tariff troubles, stiff competition and increasing operating costs remain additional concerns for Generac.

Heavy reliance on the residential business exposes Generac to weather-driven volatility. Further, data center market expansion brings its own set of concerns. With increasing reliance on this end market, Generac is exposed to cyclical capital spending cycles in AI and data centers. Any delays in manufacturing capacity expansion could also weigh on growth targets.

Also, Residential energy growth in 2025 was largely driven by Puerto Rico’s energy grant-related program. However, with the completion of the program, energy storage systems declined in the first quarter. GNRC is also recalibrating its investments and expects the solar and storage market to contract in 2026 due to reduced U.S. federal incentives.

Key HighlightsOn June 15, 2026, Generac announced an expansion of its packaging capacity for large-megawatt generators through the acquisition of a new facility in Belvidere, IL.

On June 2, 2026, Generac announced a supply agreement with a major hyperscale data center operator to provide backup power generators for its data center infrastructure following a comprehensive qualification and audit process.

What Does Our Model Unveil for GNRC?Our proven model does not predict an earnings beat for Generac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. This not the case here.

Generac has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to ConsiderHere are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Celestica (CLS - Free Report) currently has an Earnings ESP of +1.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celestica is scheduled to report quarterly earnings on July 27. The Zacks Consensus Estimate for CLS’ to-be-reported quarter’s earnings and revenues stands at $2.29 per share and $4.35 billion, respectively. Shares of Celestica have gained 96.7% in the past year.

Seagate Technology Holdings plc (STX - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #1 at present. STX is scheduled to report quarterly figures on July 28. The Zacks Consensus Estimate for Seagate Technology’s to-be-reported quarter’s earnings and revenues is pinned at $5.10 per share and $3.49 billion, respectively. Shares of Seagate Technology are up 505.3% in the past year.

Teradyne (TER - Free Report) has an Earnings ESP of +0.59% and a Zacks Rank #2 at present. The company is scheduled to report quarterly figures on July 28. The Zacks Consensus Estimate for Teradyne’s to-be-reported quarter’s earnings and revenues is pinned at $2.04 per share and $1.22 billion, respectively. Shares of Teradyne are up 314.6% in the past year.