Genuine Parts Company (GPC Quick QuoteGPC - Free Report) is slated to release second-quarter 2021 results on Jul 22, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.56 per share on revenues of $4.37 billion.

This Atlanta-based automotive replacement parts supplier delivered better-than-anticipated earnings in the last reported quarter. The bottom line also surpassed the year-ago profit level. This outperformance stemmed from robust contribution across both major segments of the company.

Over the trailing four quarters, Genuine Parts surpassed estimates on all occasions, the average surprise being 20.32%. This is depicted in the graph below:

Trend in Estimate Revisions   

The Zacks Consensus Estimate for Genuine Parts’ second-quarter earnings per share has moved up three cents in the past 90 days. Moreover, this compares favorably with the year-ago quarter’s earnings of $1.32 per share. The Zacks Consensus Estimate for quarterly revenues also suggests year-over-year growth of 14.4%.

Earnings Whispers

Our proven Zacks model does not 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. However, that is not the case here as elaborated below.
 
Earnings ESP: Genuine Parts has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is on par 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.

Key Factors

With the economy gradually recovering from the pandemic blues, auto sales across the globe have managed to rebound, underlined by the rising momentum of new vehicle sales. Demand for vehicles in second-quarter 2021 had been strong amid preference for personal mobility, low interest rates and government stimulus. Consequently, demand for replacement parts is likely to have improved. Rising revenues from the Automotive Parts Group, the largest segment of Genuine Parts, is anticipated to have buoyed the company’s total revenues during the quarter-to-be reported. The Zacks Consensus Estimate for this segment’s quarterly net sales is pegged at $2,895 million, suggesting an increase from the $2,496 million recorded in second-quarter 2020.

Surging demand for industrial replacement parts in industries, such as equipment and machinery, iron and steel, pulp and paper and automotive, is likely to have aided the company’s Industrial Parts segment’s revenues during the quarter under review. In fact, the Zacks Consensus Estimate for quarterly revenues from the Industrial Parts unit is pinned at $1,500 million, indicating a rise from the $1,327 million reported in the year-ago period.

However, Genuine Parts’ soaring selling, general and administrative expenses, and freight costs might have hurt the company’s bottom line during the quarter under discussion. Also, rising capital expenditure for the development of technically-enhanced components is expected to have dented the company’s cash flows and overall margins during the June-end quarter.

Stocks to Consider

Here are a few stocks in the auto sector which are worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Tesla (TSLA Quick QuoteTSLA - Free Report) has an Earnings ESP of +5.85% and carries a Zacks Rank of 2, currently. The company is set to announce quarterly figures on Jul 26.

Ford Motor Company (F Quick QuoteF - Free Report) has an Earnings ESP of +227.1% and flaunts a Zacks Rank #1, at present. It is scheduled to report earnings results on Jul 28.
 
Tenneco has an Earnings ESP of +9.34% and currently carries a Zacks Rank #3. The company is slated to release quarterly numbers on Aug 5.