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Factors Shaping the Fate of Genuine Parts' (GPC) Q3 Earnings

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Genuine Parts Company (GPC - Free Report) is slated to release third-quarter 2021 results on Oct 21, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.63 per share on revenues of $4.68 billion.

This Atlanta, GA-based automotive replacement parts supplier witnessed 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 14.9%. 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-eps-surprise | Genuine Parts Company Quote

Trend in Estimate Revisions   

The Zacks Consensus Estimate for Genuine Parts’ third-quarter earnings per share has remained stable in the past 60 days and is at par with the year-ago recorded levels. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year increase of 7%.

Key Predictions

Increasing average age of vehicles (currently 12.1 years according to IHS Markit data) is likely to have positively impacted the sales of Genuine Parts’ automotive segment. For the smooth functioning of aging vehicles, customers are spending heavily to replace any faulty parts and components. This is likely to have aided the demand for Genuine Parts’ products in the to-be-reported quarter. Also, bolt-on acquisitions of Winparts, Rare Spares and PARts DB are expected to have boosted the firm’s top line in the third quarter of 2021. Consequently, the Zacks Consensus Estimate for the automotive unit’s revenues are pegged at $3,132 million, up from $2,961 million recorded in the year-ago period.

With the Inneco buyout boosting the prospects of Genuine Parts’ industrial unit, the Zacks Consensus Estimate for the segment’s revenues is pinned at $1,578 million, implying a year-over-year rise of 12%.  Genuine Parts’ growing omnichannel capabilities and efforts to strengthen retail positioning are also anticipated to have buoyed the firm’s sales. 

On a somewhat discouraging note, Genuine Parts’ soaring SG&A expenses and high capex requirements for the development of technically-enhanced components are expected to have dented the company’s cash flows during the September-end quarter. The company is also likely to have borne the brunt of high commodity and freight costs along with a a tough labor market amid global chip crunch, which would have clipped the firm’s third-quarter margins.

Earnings Whispers

Our proven 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, which is not the case here.

Earnings ESP: Genuine Parts has an Earnings ESP of 0.00%. 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.

Stocks To Consider

Here are some stocks in the auto space, which, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported:

Penske Automotive (PAG - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank #3. The stock is set to report third-quarter 2021 earnings on Oct 27.

Sonic Automotive (SAH - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #1. The stock is set to report third-quarter 2021 earnings on Oct 28.

Group 1 Automotive (GPI - Free Report) has an Earnings ESP of +2.78% and a Zacks Rank #2. The stock is set to report third-quarter 2021 earnings on Oct 28.