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Genuine Parts (GPC) Down 1.7% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
CSX (CSX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

A month has gone by since the last earnings report for Genuine Parts (GPC). Shares have lost about 1.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Genuine Parts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Genuine Parts Q4 Earnings Surpass Estimates, Up Y/Y

Genuine Parts has reported adjusted earnings of $1.35 per share in fourth-quarter 2018, up 13% year over year. The bottom line surpassed the Zacks Consensus Estimate of $1.33. During the reported quarter, each business segments witnessed revenue growth.

The company recorded net income of $186.7 million in fourth-quarter 2018, up from $108.2 million in the prior-year quarter.

Genuine Parts reported net sales of $4.6 billion, up 9% year over year. The figure was almost in line with the Zacks Consensus Estimate. Total sales included 4.6% comparable growth, 6% from acquisitions and 1.2% adverse impact of the foreign currency translation.

Operating profit increased to $356 million from $313.3 million in fourth-quarter 2017. Selling, administrative and other expenses rose to $1.21 billion from $1 billion a year ago.

2018 Results

For 2018, adjusted earnings per share were $5.68, up from the 2017 figure of $4.71.

For the year, revenues were $18.7 billion, up from the 2017 figure of $16.3 billion.

Segmental Results

The Automotive segment’s net sales improved to $2.58 billion from the year-ago figure of $2.1 billion. Moreover, the segment’s operating profit rose to $199.3 million in the reported quarter from $183.2 million a year ago.

The Industrial Parts segment’s net sales rose to $1.57 billion from $1.45 billion in the year-ago quarter. Moreover, operating profit increased to $130.8 million from $116.5 million in the year-ago quarter.

The Business Products segment’s net sales rose to $456.8 million from $449.8 million recorded in the prior-year quarter. Operating profit for the segment increased to $25.9 million from $13.7 million recorded in the prior-year quarter.

Financial Position

Genuine Parts had cash and cash equivalents of $333.5 million as of Dec 31, 2018, up from $314.9 million as of Dec 31, 2017. As of Dec 31, 2018, long-term debt decreased to $2.4 billion from $2.6 billion as of Dec 31, 2017.

Guidance

For 2019, Genuine Parts expects adjusted earnings per share of $5.81-$5.96.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Genuine Parts has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Genuine Parts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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