Generac Q3 Earnings Preview: Can The Amazon AI Deal Deliver A Major Beat?
Generac's first earnings report since landing a landmark Amazon data center deal arrives Wednesday, and investors are watching to see if a $1.6 billion backlog and a new factory can turn a headline agreement into hard shipment commitments.
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Generac (NYSE:GNRC | GNRC Price Prediction) reports third-quarter results Wednesday, October 28, before the market opens. This is the first earnings report since Generac disclosed its backup power deal with Amazon (NASDAQ:AMZN). I want to see how quickly that agreement starts showing up in the numbers.
An EPS Beat, a Growing Backlog, and a Cooling Stock
Last quarter, adjusted EPS of $2.91 exceeded the $2.0118 consensus by 44.65%, while revenue of $1.17B came in slightly below estimates. Commercial and Industrial (C&I) sales rose 29% and Residential fell 2%. About $71M in tariff refunds drove gross margin up to 44.5%.
The data center backlog reached roughly $1.6 billion, and that figure leaves out a second hyperscale customer. In mid-September, Generac disclosed a long-term deal to supply backup generators for Amazon’s data centers, with initial deliveries in 2027 and 2028. Generac is one of the less obvious winners of the AI expansion (we rounded up seven more power, cooling, and networking suppliers riding the same wave in a free report here). Amazon grew AWS revenue 37% last quarter and now expects about $220 billion in 2026 cash capex.
Generac shares closed at $186.95 Friday. They’re up 37.07% year to date but down 6.27% over the past month.
Wall Street Expects Nearly 33% EPS Growth
| Metric | Consensus | Prior Period | Implied Growth |
|---|---|---|---|
| Q3 2026 EPS | $2.4295 | $1.83 (Q3 2025) | 32.8% |
| Q3 2026 Revenue | $1.32 billion | $1.11 billion (Q3 2025) | 18.9% |
| FY2026 EPS | $9.6883 | N/A | N/A |
| FY2026 Revenue | $4.93 billion | N/A | N/A |
| FY2027 EPS | $12.9701 | FY2026 consensus | 33.9% |
| FY2027 Revenue | $6.50 billion | FY2026 consensus | 31.8% |
Backlog Math and Clean Margins Will Decide This Quarter
The backlog update matters most. Management called the second hyperscale agreement “at least as big as the first hyperscaler agreement that we announced or bigger.” I want to see how much of the Amazon commitment lands in reported backlog and how it splits between 2027 and 2028.
Next, look at margins without the tariff boost. Management guided Q3 EBITDA margins similar to Q2 levels excluding tariff recovery, and it held full-year adjusted EBITDA margin guidance at 18.5% to 19.5% before refunds. This quarter gives the first clean read on underlying profitability.
Capacity is the third test. The Sussex, Wisconsin, plant was set to begin production by the end of Q3 2026, and management outlined a path to triple assembly capacity from its $1.25 billion target within 12 months. Holding lead times at 40 to 45 weeks keeps Generac ahead of rivals. Headlines about foreign-made equipment in the U.S. bulk power system add some regulatory noise.
Residential needs a firmer tone as well. Outages ran more than 30% below baseline in Q2, and management cut segment guidance to high single digits.
Turning a Headline Deal Into 2027 Visibility
Analysts have cut their Q3 EPS estimates, which fell from $2.5588 to $2.4295 over 90 days. Over the past 30 days, FY2027 estimates drew 14 up revisions and none down. Beating estimates hasn’t been enough lately. After the Q2 beat, shares fell 1.68% the following day. I think the stock’s next leg depends on whether management can show the Amazon deal turning into scheduled shipments and the factory capacity to deliver them.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
