The quick one-two punch of Hurricane Helene and Milton hammering the US Southeast, sparking widespread devastation and massive power outages, has driven portable generator sales higher and supplies to critically low levels for at least one major manufacturer.
Bloomberg spoke with Generac CEO Aaron Jagdfeld this week, ahead of Milton making landfall on Florida's Gulf Coast on Wednseday night, who said the company sold out of portable power products after Helene hit weeks ago.
Generac specializes in backup power generation products for residential, light commercial, and industrial markets. Last month's widespread power outages from Florida to North Carolina sent demand for portable backup generators quite literally through the roof.
"The more outages that are occurring and the more they are happening, then the more interest grows in our product," Jagdfeld said during an interview.
As of Thursday morning, following Milton's landfall near Siesta Key, Florida, a barrier island next to Sarasota, there were over three million power outages across Florida. Still, in Georgia and North Carolina, tens of thousands of people were without power weeks after Helene devastated those states.
Jagdfeld said the challenge is getting enough portable generators into the region after Milton makes landfall. This is due to logistical hurdles caused by damaged critical infrastructure.
"If it's not there yet, it probably isn't not going to get there until a couple days after landfall," he said.
Shares of Generac have surged to multi-year highs this hurricane season, especially in the last few weeks. However, shares are well off the $500 peak seen during the pandemic mania era of cheap money, when the stock traded like a 'penny stock.'
Heading into earnings season, Goldman's Jerry Revich told clients earlier this week:
Generac (GNRC, Buy): Our 2024 EPS (management definition) estimate of $6.51 is in line with consensus $6.50, while our sales estimate of $4,250 mn is in line with consensus $4,246 mn. We note that search trends are up 75% yoy over the past four weeks - a positive indicator for in home consultations. Our 12-month price is $148, based on 22.1x 2025E P/E (vs 23x 2024E P/E prior), as we roll forward our valuation framework to 2025E. Risks to the downside include lower than expected demand, labor and cost inflation, natural gas could be an ESG risk, and supply chain challenges.
According to the latest Google Trends data, internet search demand for "portable generator" has surpassed decade highs.
Besides portable generators, we suspect households in these storm-ravaged areas will seek whole-house power backup systems in the weeks and months ahead as an insurance policy against the next storm or disaster of any kind. Separately, we suspect Starlink demand in these areas will surge too.
