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Are GPC's Shareholder-Friendly Moves Enough to Buy the Stock?
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Genuine Parts (GPC - Free Report) has announced a 3% increase in its regular quarterly cash dividend for 2025 with its fourth-quarter 2024 earnings results. The annually payable dividend stands at $4.12 per share, up from $4 per share in 2024, translating to a dividend yield of 3.37% at current price levels. The company has paid out dividends every year since going public in 1948, and this increase marks the 69th consecutive year of a dividend increase.
This steady dividend growth shows GPC’s financial strength and reliability, and may boost investor confidence in the stock.
In the trailing 12 months, however, the company’s shares have dipped 15.5%, underperforming the Zacks Auto, Tires and Trucks sector’s appreciation of 12.4% and the S&P 500 Index’s return of 24%.
GPC has also lagged its automotive competitors like O’Reilly Automotive (ORLY - Free Report) and AutoZone (AZO - Free Report) but outperformed peers like LKQ and Advance Auto Parts (AAP - Free Report) in the same time frame.
While ORLY and AZO shares have gained 24.6% and 24.4%, LKQ and AAP shares have dipped 21.7% and 27.6%, respectively, in the trailing 12-month period.
GPC’s subpar performance can be attributed to weak market conditions, cost pressures from high inflation and interest rates, and intense competition in the automotive and industrial parts sectors.
One-Year Performance
Image Source: Zacks Investment Research
How then should investors approach the stock? Let us delve deep to find out.
GPC Shares Undervalued
GPC shares are currently undervalued, as suggested by its Value Score of A. In terms of the forward 12-month price/earnings, the stock is trading at 14.67X, lower than the broader sector’s 23.83X.
Price/Earnings Ratio (F12M)
Image Source: Zacks Investment Research
Acquisitions & Innovations Aid GPC’s Prospects
Genuine Parts acquired over 100 companies in 2024, enhancing talent, geographic coverage and capabilities. It has executed four bolt-on acquisitions in Motion to strengthen value-added solutions.
It is also rapidly expanding its footprint by increasing its company-owned NAPA stores. NAPA-branded sales in Europe grew 16% year over year in 2024, reaching €500 million. GPC expects penetration to surge beyond 20% over the next four to five years.
The company’s investments in Artificial Intelligence (AI), Google Cloud and automation have improved catalog search, inventory management and operational efficiency.
Genuine Parts is making efforts to improve inventory efficiency with 60,000 new SKUs added in 2024. The expansion of the Indianapolis distribution center has increased capacity and delivery speed, thus optimizing the supply chain.
GPC’s global restructuring efforts delivered $45 million in 2024, with an additional $100-$125 million in expected savings for 2025. Total annualized savings are expected to reach $200 million by 2026.
Weak Markets & Intense Competition Pose Headwinds for GPC
Genuine Parts is suffering from weak market conditions, which are impacting its profitability. In a soft global automotive market, GPC is facing cost pressures and sluggish demand in key regions like Europe and the United States.
Macroeconomic challenges like high interest rates, cost inflation and political uncertainties are adding to challenges for the company. Rising costs, especially in labor and supply chain operations, are impacting profitability, with Global Automotive segment EBITDA margins declining 70 basis points in 2024.
Furthermore, GPC faces intense competition in the sale of automotive and industrial parts. As it strives to maintain competitive prices, it may need to lower prices in response to competitors’ price cuts or promotional activities, potentially leading to a decline in revenues and earnings.
GPC’s 2025 Earnings Estimates Trend Downward
Genuine Parts expects total sales growth in the year to be between 2% and 4%. EPS is expected to be between $7.75 and $8.25. Net cash provided by operating activities is anticipated to be in the band of $1.2 billion to $1.4 billion. The company expects $800 million to $1 billion of free cash flow in 2025.
The Zacks Consensus Estimate for GPC’s first-quarter 2025 EPS is currently pegged at $1.95, down by a cent over the past 30 days.
The consensus mark for GPC’s 2025 EPS is currently pegged at $8.20, down 1.2% over the past 30 days.
GPC beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed twice, the average negative surprise being 5.23%.
While GPC’s shareholder-friendly moves, strategic acquisitions and technological advancements bolster its long-term prospects, weak market conditions, intense competition and political uncertainties raise concerns about its growth trajectory.
Image: Bigstock
Are GPC's Shareholder-Friendly Moves Enough to Buy the Stock?
Genuine Parts (GPC - Free Report) has announced a 3% increase in its regular quarterly cash dividend for 2025 with its fourth-quarter 2024 earnings results. The annually payable dividend stands at $4.12 per share, up from $4 per share in 2024, translating to a dividend yield of 3.37% at current price levels. The company has paid out dividends every year since going public in 1948, and this increase marks the 69th consecutive year of a dividend increase.
This steady dividend growth shows GPC’s financial strength and reliability, and may boost investor confidence in the stock.
In the trailing 12 months, however, the company’s shares have dipped 15.5%, underperforming the Zacks Auto, Tires and Trucks sector’s appreciation of 12.4% and the S&P 500 Index’s return of 24%.
GPC has also lagged its automotive competitors like O’Reilly Automotive (ORLY - Free Report) and AutoZone (AZO - Free Report) but outperformed peers like LKQ and Advance Auto Parts (AAP - Free Report) in the same time frame.
While ORLY and AZO shares have gained 24.6% and 24.4%, LKQ and AAP shares have dipped 21.7% and 27.6%, respectively, in the trailing 12-month period.
GPC’s subpar performance can be attributed to weak market conditions, cost pressures from high inflation and interest rates, and intense competition in the automotive and industrial parts sectors.
One-Year Performance
Image Source: Zacks Investment Research
How then should investors approach the stock? Let us delve deep to find out.
GPC Shares Undervalued
GPC shares are currently undervalued, as suggested by its Value Score of A. In terms of the forward 12-month price/earnings, the stock is trading at 14.67X, lower than the broader sector’s 23.83X.
Price/Earnings Ratio (F12M)
Image Source: Zacks Investment Research
Acquisitions & Innovations Aid GPC’s Prospects
Genuine Parts acquired over 100 companies in 2024, enhancing talent, geographic coverage and capabilities. It has executed four bolt-on acquisitions in Motion to strengthen value-added solutions.
It is also rapidly expanding its footprint by increasing its company-owned NAPA stores. NAPA-branded sales in Europe grew 16% year over year in 2024, reaching €500 million. GPC expects penetration to surge beyond 20% over the next four to five years.
The company’s investments in Artificial Intelligence (AI), Google Cloud and automation have improved catalog search, inventory management and operational efficiency.
Genuine Parts is making efforts to improve inventory efficiency with 60,000 new SKUs added in 2024. The expansion of the Indianapolis distribution center has increased capacity and delivery speed, thus optimizing the supply chain.
GPC’s global restructuring efforts delivered $45 million in 2024, with an additional $100-$125 million in expected savings for 2025. Total annualized savings are expected to reach $200 million by 2026.
Weak Markets & Intense Competition Pose Headwinds for GPC
Genuine Parts is suffering from weak market conditions, which are impacting its profitability. In a soft global automotive market, GPC is facing cost pressures and sluggish demand in key regions like Europe and the United States.
Macroeconomic challenges like high interest rates, cost inflation and political uncertainties are adding to challenges for the company. Rising costs, especially in labor and supply chain operations, are impacting profitability, with Global Automotive segment EBITDA margins declining 70 basis points in 2024.
Furthermore, GPC faces intense competition in the sale of automotive and industrial parts. As it strives to maintain competitive prices, it may need to lower prices in response to competitors’ price cuts or promotional activities, potentially leading to a decline in revenues and earnings.
GPC’s 2025 Earnings Estimates Trend Downward
Genuine Parts expects total sales growth in the year to be between 2% and 4%. EPS is expected to be between $7.75 and $8.25. Net cash provided by operating activities is anticipated to be in the band of $1.2 billion to $1.4 billion. The company expects $800 million to $1 billion of free cash flow in 2025.
The Zacks Consensus Estimate for GPC’s first-quarter 2025 EPS is currently pegged at $1.95, down by a cent over the past 30 days.
The consensus mark for GPC’s 2025 EPS is currently pegged at $8.20, down 1.2% over the past 30 days.
GPC beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed twice, the average negative surprise being 5.23%.
Genuine Parts Company Price and Consensus
Genuine Parts Company price-consensus-chart | Genuine Parts Company Quote
GPC Stock: Buy, Sell or Hold?
While GPC’s shareholder-friendly moves, strategic acquisitions and technological advancements bolster its long-term prospects, weak market conditions, intense competition and political uncertainties raise concerns about its growth trajectory.
GPC currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.