What: Shares of power equipment maker Generac Holdings jumped as much as 23% in early trading Wednesday after it reported earnings. Midday shares settled in with a 14% gain.
So what: Sales increased 2% in the third quarter to $359.3 million and net income dropped 6.8% to $34.0 million, or $0.49 per share. Adjusted net income, which strips out one-time items, rose 9.5% to $63.4 million, or $0.92 per share, topping Wall Street's estimates by $0.11.
Now what: Despite a "low power outage environment," Generac continues to sell a growing number of generators to residential customers, and the commercial and industrial business is holding up despite low demand in the oil and gas segment.
The demand environment is really about as bad as it can get for Generac, so the company maintaining strong profitability and cash flow during times like these should give long-term investors confidence in the company's performance. If oil and gas picks up or we see increased storm activity, there could be flurry of sales, which might be the kind of driver Generac needs to get investors excited about this stock again.
The article Why Generac Holdings Inc.'s Shares Popped Today originally appeared on Fool.com.
Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Generac Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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