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Genuine Parts Hits New 52-Week High

Zacks Equity Research

Shares of Genuine Parts Company (GPC) reached 52-week high of $78.12 on Mar 28. Shares of the company have been escalating following its impressive fourth quarter results, increase in dividend payment and recent acquisition of Exego Group – a leading aftermarket distributor of automotive replacement parts and accessories in Australasia.

Genuine Parts has undertaken various initiatives to boost sales and earnings, such as product line expansion, penetration into new markets and cost-saving activities. The company relies on a diverse product portfolio for top-line and bottom-line growth. It has a market cap of $12.1 billion.

Genuine Parts revealed a 19.8% rise in earnings to $1.03 per share in the fourth quarter of 2012 from 86 cents in the corresponding quarter of 2011, beating the Zacks Consensus Estimate by 10 cents. Net income increased 18.7% to $160.2 million from $135.0 million in 2011.

Revenues went up 3.5% to $3.1 billion, which compared with the Zacks Consensus Estimate of $3.2 billion. The increase in revenues was driven by respectable sales growth in three of the company’s four businesses.

Genuine Parts also announced an increase in its annual dividend payment, making 2013 the 57th consecutive year of increased dividends paid to shareholders. The company’s Board of Directors announced an 8.6% increase in cash dividend to an annual rate of $2.15 per share compared with the previous dividend of $1.98 per share.

Last month, Genuine Parts revealed that it will acquire the remaining 70% stake of Exego Group for $800 million that includes the assumption of certain debt. On Jan 1, 2012, Genuine Parts Company acquired a 30% stake in Exego and held the option to acquire the remaining shares of the company later.

Formed in 1922 and headquartered in Melbourne, Australia, Exego Group has annual revenues of more than $1 billion. It owns stores at more than 430 locations across Australia and New Zealand. Genuine Parts Company believes the acquisition will help the company enjoy significant growth opportunities in the Australasian aftermarket.  

Currently, Genuine Parts Company retains a Zacks Rank #2 (Buy). Apart from Genuine Parts, other stocks from the same industry that warrant a look include Visteon Corp. (VC), Douglas Dynamics, Inc. (PLOW) and Standard Motor Products Inc. (SMP). Visteon carries a Zacks Rank #1 (Strong Buy) while the remaining two stocks carry a Zacks Rank #2 (Buy).

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