It has been about a month since the last earnings report for Genuine Parts (GPC). Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Genuine Parts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Genuine Parts Q3 Earnings Beat, Up Y/Y
Genuine Parts reported third-quarter adjusted diluted earnings of $1.63 per share, surpassing the Zacks Consensus Estimate of $1.48.
Markedly, higher-than-expected revenues from the Industrial Parts segment resulted in this outperformance. Revenues from this segment came in at $1,409 million, beating the Zacks Consensus Estimate of $1,367 million. Moreover, the bottom line came in higher than the year-ago quarter’s profit of $1.39 per share.
This Atlanta-based automotive replacement parts supplier reported net sales of $4,370 million, missing the Zacks Consensus Estimate of $4,459 million. Moreover, the top-line figure comes in lower than the year-ago quarter’s $4525 million, marking a 3.4% decline year over year. This downside resulted from the 1.8% decline in comparable sales and a 4.2% impact from divestitures. These negatives were partially offset by a 1.3% benefit from acquisitions and a 1.3% net impact of foreign currency and other.
Genuine Parts did not issue any guidance for 2020 amid the coronavirus crisis.
The Automotive segment’s net sales, which have the highest contribution to the company’s revenues, totaled $2,960 million in the reported quarter, up 6% from the prior-year quarter’s $2,792.5 million. The segment’s comparable sales rose 2.2% during the third quarter. The segment’s operating profit increased to $266.1 million in the reported quarter from the year-ago quarter’s $222.6 million.
The Industrial Parts segment’s net sales dropped 18.6% from the year-ago quarter to $1,409.7 million. The segment’s comparable sales declined 9.2% during the reported period. Resultantly, operating profit fell to $125.6 million from the year-earlier quarter’s $137.5 million.
Costs & Cash Position
Total operating expenses edged down 1.34% during the September-end quarter, primarily due to decline in selling, general and administrative (SG&A) expenses. SG&A expenses during third-quarter 2020 slid 3.01% to $1,140.2 million from the $1,175.7 million incurred in third-quarter 2019.
Genuine Parts had cash and cash equivalents worth $900.1 million as of Sep 30, 2020. Long-term debt decreased to $2,700.6 million from the $2,795.9 million recorded in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
Currently, Genuine Parts has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
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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