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Genuine Parts (GPC) Misses on Q3 Earnings, Up Year Over Year

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Genuine Parts (GPC) Misses on Q3 Earnings, Up Year Over Year

Genuine Parts (GPC) revises its 2018 adjusted earnings per share expectation of $5.60-$5.70 from the earlier expectation of $5.60-$5.75.

Genuine Parts Company GPC reported adjusted earnings of $1.48 per share, up 29% year over year. The bottom line, however, came in lower than the Zacks Consensus Estimate of $1.49.

The company recorded net income of $220.2 million in third-quarter 2018, up from $158.4 million in the prior-year quarter.

Genuine Parts reported net sales of $4.7 billion, up 15.3% year over year. The figure came in almost in-line with the Zacks Consensus Estimate. Total sales included 4.3% comparable growth, 12% from acquisitions — including Alliance Automotive Group (“AAG”), and 1% adverse impact from the foreign currency translation.

Operating profit increased to $365.7 million from $310.3 million in third-quarter 2017. Selling, administrative and other expenses rose to $1.12 billion from $931.5 million a year ago.

Genuine Parts Company Price, Consensus and EPS Surprise

Genuine Parts Company Price, Consensus and EPS Surprise | Genuine Parts Company Quote

Segmental Results

Automotive group’s net sales improved to $2.65 billion from the year-ago figure of $2.15 billion. Moreover, the group’s operating profit rose to $226.7 million in the reported quarter from $178.2 million a year ago.

The Industrial Parts group’s net sales rose year over year to $1.58 billion from $1.45 billion in the year ago quarter. Moreover, operating profit increased to $119.2 million from $108.1 million in the year-ago quarter.

The Business Products group’s net sales rose to $495.9 million, from $489.4 million recorded in the prior-year quarter. However, operating profit at the segment declined to $19.8 million from $24 million recorded in the prior-year quarter.

Financial Position

Genuine Parts had cash and cash equivalents of $359.1 million as of Sep 30, 2018, up from $210.1 million as of Sep 30, 2017. As of Sep 30, 2018, long-term debt increased to $2.5 billion from $550 million as of Sep 30, 2017.

Guidance

For full-year 2018, Genuine Parts raised the sales growth-rate expectation to 14-15% from the previous expectation of 13-14%. The company revised its adjusted earnings per share expectation of $5.6-$5.70 from the earlier expectation of $5.6-$5.75.

Zacks Rank & Key Picks

Genuine Parts currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. ALSN, AB Volvo VLVLY and Navistar International Corp. NAV. While both Allison Transmission Holdings and Volvo sport a Zacks Rank #1 (Strong Buy), Navistar has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have surged 17.4%.

Volvo has an expected long-term growth rate of 15%. Over the past two years, shares of the company have risen 38%.

Navistar has an expected long-term growth rate of 5%. Over the past two years shares of the company have risen 58.5%.

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