Power generation products company Generac (NYSE:GNRC) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 11.6% year on year to $1.09 billion. Its non-GAAP profit of $1.61 per share was 9% below analysts’ consensus estimates.
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Generac (GNRC) Q4 CY2025 Highlights:
- Revenue: $1.09 billion vs analyst estimates of $1.16 billion (11.6% year-on-year decline, 5.9% miss)
- Adjusted EPS: $1.61 vs analyst expectations of $1.77 (9% miss)
- Adjusted EBITDA: $184.4 million vs analyst estimates of $197.8 million (16.9% margin, 6.8% miss)
- Operating Margin: -0.9%, down from 16% in the same quarter last year
- Free Cash Flow Margin: 11.9%, down from 23.2% in the same quarter last year
- Market Capitalization: $10.7 billion
“Although our fourth quarter results reflect a softer outage environment and lower shipments of home standby and portable generators, our momentum in the data center end market has further accelerated as we continue to develop our position as a key supplier to multiple hyperscale customers which are expected to add significant volumes to our backlog over the next several quarters,” said Aaron Jagdfeld, President and Chief Executive Officer.
Company Overview
With its name deriving from a combination of “generating” and “AC”, Generac (NYSE:GNRC) offers generators and other power products for residential, industrial, and commercial use.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Generac grew its sales at an impressive 11.1% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Generac’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.3% over the last two years was well below its five-year trend. 
Generac also breaks out the revenue for its most important segments, Residential and Commercial and Industrial, which are 52.4% and 36.6% of revenue. Over the last two years, Generac’s Residential revenue (sales to consumers) averaged 6.5% year-on-year growth while its Commercial and Industrial revenue (sales to contractors and pros) was flat. 
This quarter, Generac missed Wall Street’s estimates and reported a rather uninspiring 11.6% year-on-year revenue decline, generating $1.09 billion of revenue.
Looking ahead, sell-side analysts expect revenue to grow 12% over the next 12 months, an improvement versus the last two years. This projection is commendable and suggests its newer products and services will spur better top-line performance.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Generac has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Generac’s operating margin decreased by 12.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, Generac’s breakeven margin was -0.9%, down 16.9 percentage points year on year. Since Generac’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Generac’s flat EPS over the last five years was below its 11.1% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
We can take a deeper look into Generac’s earnings to better understand the drivers of its performance. As we mentioned earlier, Generac’s operating margin declined by 12.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Generac, its two-year annual EPS growth of 8.2% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.
In Q4, Generac reported adjusted EPS of $1.61, down from $2.80 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Generac’s full-year EPS of $6.35 to grow 27.1%.
Key Takeaways from Generac’s Q4 Results
We were impressed by how significantly Generac blew past analysts’ Commercial and Industrial revenue expectations this quarter. On the other hand, its Residential revenue missed and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded up 1.3% to $184.67 immediately after reporting.
Big picture, is Generac a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
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