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Generac Holdings Inc. (GNRC) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Generac Holdings Inc. (GNRC)

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Intrinsic Value (DCF)

Current$161.43
→
Intrinsic$267.91
+66%
$176.27$267.91$441.90
Market implies 8% growth for 5 years
DCF analysis suggests GNRC could have 66% upside at 20% growth — verify assumptions match your view.
At $161, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (20%).
Range: Bear $176 → Bull $442. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$330$360$391$424
10%$226$247$268$291
12%$169$184$200$217
14%$132$144$157$170

Bull Case

  • Bull case ($442) offers 174% upside at 23% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (8%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($176) with 16% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$722.46M
Year 2$863.34M
Year 3$1.03B
Year 4$1.23B
Year 5$1.47B
Terminal$21.68B

📐 Model Inputs

Growth Rate19.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$604.57MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is GNRC stock undervalued or overvalued?
🟢 UNDERVALUED

GNRC trades at $161.43 vs. our DCF-derived intrinsic value of $267.91, implying +84% upside. At a 10.0% WACC and 19.5% projected FCF growth, the market appears to be underpricing the present value of GNRC's future cash flows. The bear case ($169.63) still suggests upside, providing margin of safety.

What is GNRC's intrinsic value?

Using a 5-year DCF model: Base FCF of $605M, projected at 19.5% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.19B net debt and dividing by 0.06B shares: Bear $169.63 | Base $267.91 | Bull $412.13. Current price $161.43 implies +84% to base case.

How is GNRC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 19.5% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($17.36B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 28.7x.