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Genuine Parts (GPC) Beats Q3 Earnings Estimates, Tweaks View

Zacks Equity Research

Genuine Parts Company GPC reported adjusted earnings of $1.50 per share in third-quarter 2019, surpassing the Zacks Consensus Estimate of $1.47. Following the company’s better-than-expected earnings, Genuine Parts' share price moved up 1.23% to close at $98.93 on Oct 18.

Notably, strategic buyouts of PartsPoint, Inenco and Alliance Automotive Group drove the results. The bottom line also improved from the year-ago profit of $1.48 a share.

Genuine Parts reported net sales of $5,015 million, marginally missing the Zacks Consensus Estimate of $5,026 million. The top line, however, increased 6.2% year over year. Net sales included 1.2% comparable growth, roughly 6.7% from acquisitions, partly offset by adverse impact of 1% due to foreign currency translation and 0.7% attributable to the sale of Grupo Auto Todo.

Genuine Parts Company Price, Consensus and EPS Surprise

 

Genuine Parts Company Price, Consensus and EPS Surprise

Genuine Parts Company price-consensus-eps-surprise-chart | Genuine Parts Company Quote

Segmental Results

The Automotive segment’s net sales came in at $2,790 million, up 5.3% year over year. The segment’s comparable sales growth was 1.8% during the quarter. Acquisition of PartsPoint and Inenco drove the automotive unit’s sales. However, the segment’s operating profit declined to $222.1 million in the reported quarter from $226.7 million a year ago.

The Industrial Parts segment’s net sales rose 9.8% from the year-ago quarter to $1,732.8 million, aided by buyout benefits. The segment’s comps growth was 0.9%. Resultantly, operating profit increased to $137.5 million from $119.2 million in the year-ago quarter.

The Business Products segment’s net sales fell to $491.5 million from $495.8 million recorded in the prior-year quarter. Nonetheless, operating profit from the segment rose to $21.6 million from $19.8 million recorded in the prior-year quarter.

Financial Position

Genuine Parts had cash and cash equivalents of $451.3 million as of Sep 30, 2019, up from $359.1 million in the corresponding period of 2018. As of Sep 30, 2019, its long-term debt increased to $2.8 billion from $2.4 billion in the comparable year-ago period. The company’s debt-to-capital ratio stands at 43.2%.

2019 Guidance Updated

Considering the impact of the sale of the Electrical Specialties Group of Motion Industries, the company downwardly revised its guidance. It now expects sales to increase 3.5% versus the prior view of 4.5-5.5% growth. The company currently expects adjusted earnings per share within $5.60-$5.68 compared with the previous forecast of $5.65-$5.75.

Zacks Rank and Other Stocks to Consider

Genuine Parts currently has a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space include Veoneer, Inc. VNE, Standard Motor Products, Inc. SMP and Tesla TSLA, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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