Shares of on-premise generator company Generac (GNRC 20.06%) rallied on Wednesday, up 16.2% as of 1:32 p.m. ET.

Generac reported earnings today that beat analyst expectations across the board; meanwhile, the company also raised the lower end of its full-year guidance, as first-half results appeared to de-risk the outlook while adding to optimism for future beats.

Electricity scarcity on the minds of consumers?

In the second quarter, Generac saw revenue rise 6.2%, with residential growth up 7% and commercial and industrial growth of 5%. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins increased from 16.5% to 17.7%. Combined with share repurchases, which lowered the share count, adjusted non-GAAP (generally accepted accounting principles) earnings per share surged 22.2% to $1.65, beating expectations.

Meanwhile, management increased the low end of its full-year guidance ranges, with the full-year revenue outlook now being in a tighter 2% to 5% range, as opposed to the prior 0% to 7% range. Adjusted EBITDA margins are now projected to be 18% to 19%, compared with last quarter's guidance of 17% to 19%.

While the updated guidance didn't necessarily blow anyone away, it appears management is being conservative, and the second-quarter results handily surpassed street expectations. There has also been a lot of talk about artificial intelligence (AI) data center growth and the potential strain on the electricity grid, which may be feeding into businesses and consumers investing in on-premises generators.

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Generac is a high-quality name at a reasonable price

After today's surge, Generac trades around 24 times this year's estimates and 21 times next year's estimates. While not especially cheap for a mid-single-digit grower, it's not demanding for a high-quality market leader. So, one can consider Generac a growth at a reasonable price (GARP) stock.

Generac also tends to see a sales surge when there is a disaster that knocks out electricity to homes and businesses, which usually spurs sales activity for on-premises generators. As such, one can think of the stocks as a portfolio hedge against those scenarios.