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Genuine Parts (GPC) Q1 Earnings Top, Announces Acquisition
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Genuine Parts Company (GPC - Free Report) reported earnings of $1.08 per share in first-quarter 2017, higher than $1.05 recorded in the year-ago quarter. Also, earnings per share surpassed the Zacks Consensus Estimate of $1.05.
The company recorded net income of $160.2 million in the first quarter of 2017, up from $158 million in the prior-year quarter.
Revenues in the reported quarter rose 5% year over year to $3.91 billion and surpassed the Zacks Consensus Estimate of $3.87 billion. The rise was due to growth in the company’s international automotive, industrial, electrical and office operations businesses, partly offset by headwinds in the U.S. automotive business.
Operating profit increased to $286.9 million from $284.6 million in the first quarter of 2017, and selling, general and administrative expenses rose to $873.8 million from $823.2 million a year ago.
Genuine Parts Company Price, Consensus and EPS Surprise
Revenues at the Automotive Parts segment improved 3% to $2 billion from the year-ago level of $1.93 billion. The segment’s operating profit decreased to $151.8 million in the reported quarter from $153.7 million a year ago.
Revenues at the Motion Industries or Industrial segment increased 7% to $1.23 billion. Operating profit at the segment was $90.4 million, up from $81.8 million in the year-ago quarter.
The Electrical or EIS segment’s revenues rose 9% year over year to $184.4 million. Operating profit decreased to $13.6 million from $14.8 million in the year-ago quarter.
The S. P. Richards or Office Products segment’s revenues improved 5% to $519 million. Operating profit at the segment declined to $31.1 million from $34.2 million a year ago.
Financial Position
Genuine Parts had cash and cash equivalents of $177.9 million as of Mar 31, 2017, down from $205.1 million as of Mar 31, 2016. However, long-term debt increased to $550 million as of Mar 31, 2017, from $250 million as of Mar 31, 2016.
In first-quarter 2017, Genuine Parts’ net cash flow from operations decreased to $101.8 million from $135 million in the prior-year period. Capital expenditures increased to $24.8 million from $11.7 million in the year-ago period.
Guidance
For 2017, Genuine Parts continues to expect annual revenues to increase 3% to 4%. Earnings per share in 2017 are expected to be in the range of $4.75–$4.85, up from the prior expectation of $4.70–$4.80.
Acquisition
Genuine Parts has entered into a definitive agreement to acquire Merle's Automotive Supply, an automotive parts distributor with 14 locations. The acquisition is expected to generate annual revenues of $45 million. The deal is expected to conclude on May 1, 2017.
Price Performance
Genuine Parts has underperformed the Zacks categorized Auto/Truck Replacement Parts industry over the last three months. During this period, the company’s share price decreased 9.1%, while the industry lost 7.4%.
Zacks Rank & Key Picks
Genuine Parts Motors currently carries a Zacks Rank #4 (Sell).
BorgWarner has an expected long-term growth rate of 8.6%.
American Axle has an expected growth rate of around 8.1% over the long term.
GKN has an expected long-term growth rate of 6.6%.
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Genuine Parts (GPC) Q1 Earnings Top, Announces Acquisition
Genuine Parts Company (GPC - Free Report) reported earnings of $1.08 per share in first-quarter 2017, higher than $1.05 recorded in the year-ago quarter. Also, earnings per share surpassed the Zacks Consensus Estimate of $1.05.
The company recorded net income of $160.2 million in the first quarter of 2017, up from $158 million in the prior-year quarter.
Revenues in the reported quarter rose 5% year over year to $3.91 billion and surpassed the Zacks Consensus Estimate of $3.87 billion. The rise was due to growth in the company’s international automotive, industrial, electrical and office operations businesses, partly offset by headwinds in the U.S. automotive business.
Operating profit increased to $286.9 million from $284.6 million in the first quarter of 2017, and selling, general and administrative expenses rose to $873.8 million from $823.2 million a year ago.
Genuine Parts Company Price, Consensus and EPS Surprise
Genuine Parts Company Price, Consensus and EPS Surprise | Genuine Parts Company Quote
Segment Results
Revenues at the Automotive Parts segment improved 3% to $2 billion from the year-ago level of $1.93 billion. The segment’s operating profit decreased to $151.8 million in the reported quarter from $153.7 million a year ago.
Revenues at the Motion Industries or Industrial segment increased 7% to $1.23 billion. Operating profit at the segment was $90.4 million, up from $81.8 million in the year-ago quarter.
The Electrical or EIS segment’s revenues rose 9% year over year to $184.4 million. Operating profit decreased to $13.6 million from $14.8 million in the year-ago quarter.
The S. P. Richards or Office Products segment’s revenues improved 5% to $519 million. Operating profit at the segment declined to $31.1 million from $34.2 million a year ago.
Financial Position
Genuine Parts had cash and cash equivalents of $177.9 million as of Mar 31, 2017, down from $205.1 million as of Mar 31, 2016. However, long-term debt increased to $550 million as of Mar 31, 2017, from $250 million as of Mar 31, 2016.
In first-quarter 2017, Genuine Parts’ net cash flow from operations decreased to $101.8 million from $135 million in the prior-year period. Capital expenditures increased to $24.8 million from $11.7 million in the year-ago period.
Guidance
For 2017, Genuine Parts continues to expect annual revenues to increase 3% to 4%. Earnings per share in 2017 are expected to be in the range of $4.75–$4.85, up from the prior expectation of $4.70–$4.80.
Acquisition
Genuine Parts has entered into a definitive agreement to acquire Merle's Automotive Supply, an automotive parts distributor with 14 locations. The acquisition is expected to generate annual revenues of $45 million. The deal is expected to conclude on May 1, 2017.
Price Performance
Genuine Parts has underperformed the Zacks categorized Auto/Truck Replacement Parts industry over the last three months. During this period, the company’s share price decreased 9.1%, while the industry lost 7.4%.
Zacks Rank & Key Picks
Genuine Parts Motors currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the auto space include BorgWarner Inc. (BWA - Free Report) , American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) and GKN plc . All stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BorgWarner has an expected long-term growth rate of 8.6%.
American Axle has an expected growth rate of around 8.1% over the long term.
GKN has an expected long-term growth rate of 6.6%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think. See This Ticker Free >>