Generac Holdings has put up a sharp run in recent years, which naturally shifts attention to whether the current US$221.34 share price is supported by the cash the business can generate. With the focus on its cash flows and not just recent share-price strength, the question is how much of the past gains the present valuation is already baking in.

• Over the past 3 years the stock has returned 105.4%, which places a lot of weight on the idea that future cash flows can justify a much higher valuation than in the past.
• The company’s ability to convert earnings into cash, and to fund growth without stretching its balance sheet, may shape how reliable those future cash flows look to investors studying Generac Holdings today.
• Prefer to judge…