Investors should take notice of GENERAC HOLDINGS INC (NYSE:GNRC)—it offers a great deal for the fundamentals it presents.

Our stock screening tool has identified GENERAC HOLDINGS INC (NYSE:GNRC) as an undervalued gem with strong fundamentals. GNRC boasts decent financial health and profitability while maintaining an attractive price point. We'll break it down further.

Evaluating Valuation: GNRC

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. GNRC boasts a 7 out of 10:

• Based on the Price/Earnings ratio, GNRC is valued cheaper than 81.44% of the companies in the same industry.
• When comparing the Price/Earnings ratio of GNRC to the average of the S&P500 Index (28.13), we can say GNRC is valued slightly cheaper.
• Based on the Price/Forward Earnings ratio, GNRC is valued cheaply inside the industry as 81.44% of the companies are valued more expensively.
• The average S&P500 Price/Forward Earnings ratio is at 21.03. GNRC is valued slightly cheaper when compared to this.
• 82.47% of the companies in the same industry are more expensive than GNRC, based on the Enterprise Value to EBITDA ratio.
• Based on the Price/Free Cash Flow ratio, GNRC is valued cheaply inside the industry as 89.69% of the companies are valued more expensively.
• The excellent profitability rating of GNRC may justify a higher PE ratio.

Analyzing Profitability Metrics

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For GNRC, the assigned 8 is a significant indicator of profitability:

• The Return On Assets of GNRC (6.37%) is better than 86.60% of its industry peers.
• GNRC has a better Return On Equity (13.04%) than 86.60% of its industry peers.
• GNRC's Return On Invested Capital of 9.89% is amongst the best of the industry. GNRC outperforms 86.60% of its industry peers.
• The 3 year average ROIC (8.99%) for GNRC is below the current ROIC(9.89%), indicating increased profibility in the last year.
• GNRC has a better Profit Margin (7.57%) than 85.57% of its industry peers.
• GNRC has a Operating Margin of 12.49%. This is amongst the best in the industry. GNRC outperforms 83.51% of its industry peers.
• The Gross Margin of GNRC (38.77%) is better than 87.63% of its industry peers.

Looking at the Health

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. GNRC has received a 7 out of 10:

• An Altman-Z score of 3.71 indicates that GNRC is not in any danger for bankruptcy at the moment.
• With a decent Altman-Z score value of 3.71, GNRC is doing good in the industry, outperforming 78.35% of the companies in the same industry.
• GNRC has a debt to FCF ratio of 2.21. This is a good value and a sign of high solvency as GNRC would need 2.21 years to pay back of all of its debts.
• GNRC has a Debt to FCF ratio of 2.21. This is amongst the best in the industry. GNRC outperforms 84.54% of its industry peers.
• Even though the debt/equity ratio score it not favorable for GNRC, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
• The current and quick ratio evaluation for GNRC is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Understanding GNRC's Growth Score

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. GNRC scores a 5 out of 10:

• GNRC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 34.32%, which is quite impressive.
• The Revenue has been growing by 14.28% on average over the past years. This is quite good.
• GNRC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.43% yearly.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of GNRC for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.