Genuine Parts (GPC) to Post Q4 Earnings: What's in the Cards?
Genuine Parts Company GPC is slated to release fourth-quarter 2023 results on Feb 15, before market open. The Zacks Consensus Estimate for earnings per share is pinned at $2.20, implying growth of 7.32% from the year-ago reported number. The consensus estimate has moved down by a penny in the past 60 days.
The Zacks Consensus Estimate for revenues is pegged at $5.63 billion, suggesting a year-over-year increase of 1.99%. Over the trailing four quarters, Genuine Parts surpassed earnings estimates on each occasion, the average surprise being 5.58%. This is depicted in the graph below:
Genuine Parts Company Price and EPS Surprise
Genuine Parts Company price-eps-surprise | Genuine Parts Company Quote
Q3 Highlights
In third-quarter 2023, GPC’s adjusted earnings per share of $2.49 surpassed the consensus mark of $2.40 and rose 11.6% year over year. High-than-expected profits from the Industrial Parts segment resulted in the outperformance. The company reported net sales of $5.84 billion, lagging the Zacks Consensus Estimate of $5.89 billion. The top line, however, rose 2.6% year over year.
Factors at Play
Genuine Parts’ automotive and industrial businesses are gaining from several tailwinds. The continuous increase in miles driven, the average age of vehicles and high new vehicle financing are aiding demand in the automotive aftermarket, thus bolstering segmental revenues.
The Industrial unit is gaining from manufacturing expansion and a diversified portfolio of customers and end markets. GPC’s industrial segment, Motion, is a major growth engine for the firm. The increase in revenues from both segments is likely to have bolstered the company’s overall fourth-quarter performance.
Also, the upbeat 2023 view sparks optimism. Genuine Parts projects revenues from the Automotive segment to increase 4-6% year over year. Sales from the Industrial segment are also expected to rise 4-6%.
Segment-wise, our estimate for fourth-quarter revenues from the Automotive unit is pegged at $3.49 billion, indicating a rise from $3.43 billion recorded in the corresponding quarter of 2022. Our estimate for fourth-quarter revenues from Industrial is pinned at $2.17 billion, indicating a rise from $2.09 billion recorded in the corresponding quarter of 2022.
However, with the technology shift in full swing, Genuine Parts is focused on developing and upgrading its offerings to remain on par with the evolving trends in the automotive market. The new features and component designs call for high capex requirements, thereby limiting cash flows. The company expects the capital expenditure for 2023 to be in the range of $375 million to $400 million, up from the 2022 level of $340 million. High capital expenditure is likely to have hurt the to-be-reported quarter’s earnings.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for GPC this time around. A positive Earnings ESP, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. This is not the case here.
Earnings ESP: GPC has an Earnings ESP of -1.17%. This is because the Most Accurate Estimate is pegged 3 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: GPC currently carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are a few players from the auto space that, per our model, have the correct ingredients to post an earnings beat this time.
Lucid Group, Inc. LCID will release fourth-quarter 2023 results on Feb 21. The company has an Earnings ESP of +5.36% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LCID’s to-be-reported quarter’s loss and revenues is pegged at 28 cents per share and $166.76 million, respectively. Lucid missed earnings estimates in each of the trailing four quarters, the average negative surprise being 7.70%.
LKQ Corporation LKQ will release fourth-quarter 2023 results on Feb 22. The company has an Earnings ESP of +5.40% and a Zacks Rank #3.
The Zacks Consensus Estimate for LKQ’s to-be-reported quarter’s earnings and revenues is pegged at 75 cents per share and $3.51 billion, respectively. LKQ surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 0.75%.
Luminar Technologies, Inc. LAZR will release fourth-quarter 2023 results on Feb 27. The company has an Earnings ESP of +5.26% and a Zacks Rank #3.
The Zacks Consensus Estimate for LAZR’s to-be-reported quarter’s loss and revenues is pegged at 19 cents per share and $27.25 million, respectively. Luminar surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 1.63%.
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Genuine Parts Company (GPC) : Free Stock Analysis Report
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