Genuine Parts Poised to Grow on Strategic Steps and Buyouts


On Aug 22, 2014, we issued an updated research report on Genuine Parts Company (GPC). This Zacks Rank #2 (Buy) stock reported a 2.4% positive earnings surprise in the last reported quarter.

Genuine Parts reported earnings of $1.28 per share in the second quarter of 2014, exceeding the Zacks Consensus Estimate by 3 cents. Earnings were up 9.4% from adjusted earnings of $1.17 in the comparable quarter of the previous year.

Genuine Parts has undertaken various initiatives to boost sales and earnings, such as product line expansion, penetration into new markets and implementation of cost-saving strategies. The company relies on a diverse product portfolio for top and bottom-line growth. In the Automotive Parts segment, the company expects demand to remain strong as the average age of vehicles on the road has risen to over 11 years.

Genuine Parts frequently undertakes acquisitions to expand business. The buyout of Impact Products, LLC in Jul 2014 is expected to generate annual revenues of around $85 million. Notably, Genuine Parts is expected to record revenues to the tune of $255 million from its recent takeovers.

Further, Genuine Parts consistently enhances shareholders’ value through buybacks and dividend payouts. Banking on its strong capital position, in the first half of 2014, the company repurchased approximately 635,000 shares. Also, it has about 10 million shares authorized and available for repurchase. Meanwhile, Genuine Parts raised its quarterly dividend for the 58th consecutive year in Feb 2014.

On the flip side, headwinds like intensifying competition and macroeconomic uncertainties pose considerable threats. Moreover, sluggishness in the Industrial and Office Products segments spells challenge for Genuine Parts.

Other Stocks to Consider

Investors interested in automobile stocks could also consider Tesla Motors, Inc. (TSLA), Fox Factory Holding Corp (FOXF) and Visteon Corporation (VC). While Tesla and Visteon Corporation sport a Zacks Rank #1 (Strong Buy), Fox Factory carries a Zacks Rank #2.

Read the Full Research Report on GPC
Read the Full Research Report on VC
Read the Full Research Report on TSLA
Read the Full Research Report on FOXF

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