Why Does Generac Stock Cost More Than Its Faster-Growing Peers?
Generac (GNRC) trades at the highest earnings multiple in its five-company peer group on a trailing basis. Yet it ranks last of the five on revenue growth over the past year, and fourth on operating margin. The case for paying up rests on something the trailing numbers do not show yet: a data center order book that ships mostly in 2027.
How Does The Past Year’s Slowest Grower Carry The Highest Multiple?
AZZ trades at 20.0 times earnings, about half of Generac’s 39.9. It grew revenue 5.7% over the last twelve months, against 0.6% for Generac. It also runs an operating margin of 16.2%, against Generac’s 9.5%.
| GNRC | RRX | FELE | GEV | AZZ | |
|---|---|---|---|---|---|
| Market Cap ($ Bil) | 10.3 | 9.9 | 4.2 | 247.9 | 4.0 |
| PE Ratio | 39.9 | 30.7 | 27.2 | 26.0 | 20.0 |
| LTM Revenue Growth | 0.6% | 3.5% | 7.4% | 13.0% | 5.7% |
| LTM Operating Margin | 9.5% | 11.7% | 13.0% | 4.4% | 16.2% |
| 12M Stock Return | -5.7% | 6.7% | 2.7% | 47.5% | 15.9% |
Generac’s multiple carries a caveat. Its trailing earnings include at least one loss quarter, so the multiple is not comparable to a clean year’s. Even so, neither growth nor margin puts Generac near the top of the group. Investors are paying for what comes next.
What Does The Data Center Order Book Actually Buy?
It buys a shift toward large megawatt generators for data centers. At its July report, Generac put its data center backlog at $1.6 billion. About $250 million of that backlog was due to ship in the second half of 2026. The CEO said about $1.35 billion of it was scheduled for delivery in 2027, and nothing at that point for 2028.
On Wednesday, a regulatory filing showed a long-term agreement to supply backup generators for Amazon data centers. Initial deliveries are expected to total about $2.4 billion across 2027 and 2028. Generac’s revenue over the trailing twelve months was $4.44 billion.
Orders become revenue only if Generac can build the machines. In late July, management said it had a path to triple its production capacity for large megawatt generators within 12 months, from an original year-end 2026 target of $1.25 billion. At that point, its new plant in Sussex, Wisconsin was on track to start production by the end of the third quarter of 2026.
What Has Generac Promised Before Those Orders Ship?
The nearer test is the 2026 guide. Management expects net sales to grow in the mid- to high teens percent range, including a roughly 2% lift from currency, acquisitions and divestitures, with nearly $450 million of data center revenue. Its commercial and industrial segment is now guided to grow in the low 30s percent range, up from the mid- to high 20s.
The trailing 0.6% looks backward, while the guide counts the data center ramp management expects in the second half of 2026. The guide is the premium’s first test, but the bigger wager is on 2027.
One part of the guide moved the other way. The residential segment, where home standby generators returned to growth, is now guided to high single-digit growth for 2026, down from about 10%. Management blames soft power outages and affordability concerns, and says its growing data center backlog is offsetting that cut in the company-wide sales outlook.
So the premium is a wager on execution in 2027. If the build-out slips, the high multiple has less to rest on. Ranking stocks on growth, profitability and valuation side by side is the fair way to test that wager.
Do You Pay Now For Generators That Ship Later?
Only if you trust the build-out to land on time. Nobody can settle that today. You are being asked to believe that a slow grower will outgrow cheaper peers. Line Generac up against them on every measure at once. Then remember that a peer group is one corner of one industry. The Trefis High Quality Portfolio makes that comparison across the whole market. That portfolio has a track record of outpacing the three major indices.