Will Genuine Parts (GPC) Miss Earnings Estimates?


Genuine Parts Company (GPC) is set to report second-quarter 2014 results on Jul 21, 2014. Last quarter, it posted a positive surprise of 0.99%. Let’s see how things are shaping up for this announcement.

Earnings Whispers?

Our proven model does not conclusively show that Genuine Parts is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, stands at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are $1.25 currently.

Zacks Rank: Genuine Parts’ Zacks Rank #3 (Hold) when combined with an ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Factors to Consider this Quarter

Genuine Parts has been undertaking various initiatives to boost sales and earnings, such as product line expansion, penetration into new markets and cost-saving activities. The company relies on a diverse product portfolio for top-line and bottom-line growth. Genuine Parts is also actively undertaking acquisitions to expand business. For 2014, Genuine Parts expects total revenue growth in the range of 6–8% and earnings per share between $4.49 and $4.59.

Genuine Parts expects sluggish demand in the Industrial and Office Products segments. Price competition will further undermine revenues and earnings of the company. Moreover, unfavorable economic conditions including low economic growth, high unemployment and increased energy costs have adversely affected the credit markets, consumer and business confidence and commodity prices. This uncertain economic scenario is a challenge for Genuine Parts.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Gentex Corp. (GNTX) has an earnings ESP of +2.08% and a Zacks Rank #1 (Strong Buy). Gentex will be reporting second-quarter 2014 earnings on Jul 24, 2014.

Meritor, Inc. (MTOR) has an earnings ESP of +6.67% and a Zacks Rank #1. The company will be reporting second-quarter earnings on Jul 31, 2014.

Dana Holding Corporation (DAN) has an earnings ESP of +5.77% and a Zacks Rank #2 (Buy). The company will release its second-quarter financial results on Jul 24, 2014.

Read the Full Research Report on GPC
Read the Full Research Report on GNTX
Read the Full Research Report on MTOR
Read the Full Research Report on DAN

Zacks Investment Research

View Comments (0)