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What's in Store for Genuine Parts (GPC) This Earnings Season?

·5 min read

Genuine Parts Company GPC is slated to release second-quarter 2022 results on Jul 27, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $2.02 and $5.27 billion, respectively.

The Zacks Consensus Estimate for Genuine Parts’ second-quarter earnings per share has been unchanged over the past 60 days. The bottom-line projection implies year-over-year growth of 16.1%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 10.2%.

This Atlanta, GA-based automotive replacement parts supplier recorded better-than-anticipated earnings in the last reported quarter on higher-than-expected sales and operating profits across both its segments. Over the trailing four quarters, Genuine Parts surpassed earnings estimates on all occasions, with the average being 11.3%. This is depicted in the graph below:

Genuine Parts Company Price and EPS Surprise

Genuine Parts Company Price and EPS Surprise
Genuine Parts Company Price and EPS Surprise

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

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Genuine Parts this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Earnings ESP: Genuine Parts has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is in line with 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: Genuine Parts currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Things to Note

Per IHS Markit, the average age of passenger cars and light trucks hit a record high of 12.2 years. This boosted the demand for Genuine Parts’ offerings, which will positively reflect on the upcoming results. Also, bolt-on acquisitions of Winparts, Rare Spares and PARts DB are expected to have boosted the firm’s top line in second-quarter 2022. Consequently, the Zacks Consensus Estimate for the Automotive unit’s revenues is pegged at $3,254 million, indicating an increase from $3,196 million recorded in the year-ago period.

The Zacks Consensus Estimate for revenues from the Industrial Parts unit is $1,889, suggesting growth from $1,587 generated in the year-ago period. The segmental revenues are likely to have received a boost from the Inneco buyout, which also expanded the industrial footprint of Genuine Parts to Australasia. The consensus mark for the segment’s operating profit is pegged at $171 million, implying an increase from $150 million recorded in second-quarter 2021.

On the flip side, supply chain disruptions, manufacturing inefficiencies, logistical constraints and high commodity costs are likely to have clipped margins. Additionally, the company has been bearing the brunt of increasing SG&A costs for the past several quarters, which is denting operating profits and the trend is likely to have continued in the to-be-reported quarter. With the technology shift in full swing, GPC has to develop and upgrade its offerings to remain on par with the evolving trends in the automotive market. The new features and component designs call for high R&D costs and capex requirements, which are anticipated to have clipped profits. The consensus mark for operating profit from the Automotive segment is pegged at $273 million, implying a decline from $291 million recorded in the year-ago period.

Stocks With Favorable Combination

While an earnings beat appears uncertain for Genuine Parts, here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:

Lear Corporation LEA has an Earnings ESP of +7.58% and a Zacks Rank #3. The company is set to post second-quarter results on Aug 2.

The Zacks Consensus Estimate for Lear’s to-be-reported quarter’s earnings and revenues is pegged at $1.19 per share and $4.75 billion, respectively. LEA surpassed earnings estimates in three of the last four quarters and missed once, with the average being 6.53%.

BorgWarner BWA has an Earnings ESP of +0.41% and a Zacks Rank #3. The company is slated to release second-quarter results on Aug 3.

The Zacks Consensus Estimate for BorgWarner’s to-be-reported quarter’s earnings and revenues is pegged at 88 cents per share and $3.72 billion, respectively. BWA surpassed earnings estimates in each of the last four quarters, with the average being 33.1%.

Allison Transmission ALSN has an Earnings ESP of +0.28% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Aug 3.

The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.35 per share and $698 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with the average being 11.7%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Genuine Parts Company (GPC) : Free Stock Analysis Report
 
BorgWarner Inc. (BWA) : Free Stock Analysis Report
 
Lear Corporation (LEA) : Free Stock Analysis Report
 
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
 
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