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Zacks Investment Ideas feature highlights: AutoZone and Genuine Parts

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For Immediate Release

Chicago, IL – April 6, 2023 – Today, Zacks Investment Ideas feature highlights AutoZone (AZO - Free Report) and Genuine Parts (GPC - Free Report) .

2 Auto Stocks to Buy in April

Although older cars are more frequent for repairs and maintenance, inflation has given a boost to used car sales with consumers less willing to spend on brand-new vehicles.

With that being said, AutoZone and Genuine Parts are two stocks that should be able to capitalize on this trend in auto sales.

Brief Overview

AutoZone and Genuine Parts have continued to expand as providers of automotive replacement parts. To that point, AutoZone is one of the leading specialty retailers and distributors of auto parts in the U.S. with over 6,000 stores in the Americas including Mexico and Brazil.

AutoZone stores offer wide-ranging products for cars, SUVs, vans, and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive parts.

As for Genuine Parts, the company distributes automotive and industrial replacement parts and materials with a network of more than 10,600 locations across 17 countries.

Primarily under the brand name National Automotive Parts Association (NAPA) the automotive segment provides products and services for substantially all domestic and foreign motor vehicles.

Genuine Parts’ industrial segment operates as Motion Industries Inc. (Motion) and provides industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission products, industrial automation, hose, hydraulic and pneumatic components, industrial and safety supplies, and material handling products.

Performance & Valuation

Year to date, AutoZone stock is up +1% Vs. Genuine Parts -6% with both trailing the S&P 500’s +7%. However, over the last three years, AutoZone stock has soared +186% with Genuine Parts climbing +142% to easily top the benchmark.

Trading around $2,500 per share and only 4% from its 52-week high, AutoZone stock has a forward P/E of 19.5X. In comparison, Genuine Parts stock is 14% off its highs at $162 a share and trades at 18.4X forward earnings.

Genuine Parts’ P/E valuation is below the S&P 500’s 18.9X but above the Automotive-Replacement Parts industry’s 14.5X. Still, Genuine Parts is an industry leader and trades 21% below its decade high of 23.4X and slightly beneath the median of 18.9X.

AutoZone stock trades just above the benchmark’s P/E valuation but slightly below its Automotive-Retail and Wholesale Parts industry average of 21X. Shares of AZN trade 6% below their own decade-long high of 20.7X but 15% above the median of 16.9X.

Growth & Outlook

AutoZone earnings are now expected to rise 9% in fiscal 2023 and jump another 12% in FY24 at $143.75 per share. Plus, earnings estimate revisions have gone up for both FY23 and FY24 throughout the quarter.  

Sales are forecasted to be up 7% this year and rise another 4% in FY24 to $18.19 billion. More impressive, Fiscal 2024 would be a 53% increase from pre-pandemic levels with 2019 sales at $11.86 billion.

Pivoting to Genuine Parts, earnings are projected to rise 7% this year and jump another 7% in FY24 at $9.57 per share. Even better, earnings estimates have also gone up for GPC over the last 90 days.  

On the top line, sales are forecasted to be up 5% this year and edge up another 4% in FY24 to $24.21 billion. Fiscal 2024 would represent 25% growth from pre-pandemic levels with 2019 sales at $19.39 billion.

Bottom Line  

AutoZone and Genuine Parts stock land a Zacks Rank #2 (Buy) at the moment. The rising earnings estimate revisions offer further support to both companies’ P/E valuations.

Furthermore, with the used car market very prosperous at the moment this may continue to benefit AutoZone and Genuine Parts in the foreseeable future and lead to more upside in their stocks.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Genuine Parts Company (GPC) - free report >>

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