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Why Is Genuine Parts (GPC) Up 1.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Genuine Parts (GPC - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Genuine Parts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Genuine Parts Misses on Q3 Earnings, Up Year Over Year

Genuine Parts reported adjusted earnings of $1.48 per share, up 29% year over year. The bottom line, however, came in lower than the Zacks Consensus Estimate of $1.49.

The company recorded net income of $220.2 million in third-quarter 2018, up from $158.4 million in the prior-year quarter.

Genuine Parts reported net sales of $4.7 billion, up 15.3% year over year. The figure came in almost in-line with the Zacks Consensus Estimate. Total sales included 4.3% comparable growth, 12% from acquisitions — including Alliance Automotive Group (“AAG”), and 1% adverse impact from the foreign currency translation.

Operating profit increased to $365.7 million from $310.3 million in third-quarter 2017. Selling, administrative and other expenses rose to $1.12 billion from $931.5 million a year ago.

Segmental Results

Automotive group’s net sales improved to $2.65 billion from the year-ago figure of $2.15 billion. Moreover, the group’s operating profit rose to $226.7 million in the reported quarter from $178.2 million a year ago.

The Industrial Parts group’s net sales rose year over year to $1.58 billion from $1.45 billion in the year ago quarter. Moreover, operating profit increased to $119.2 million from $108.1 million in the year-ago quarter.

The Business Products group’s net sales rose to $495.9 million, from $489.4 million recorded in the prior-year quarter. However, operating profit at the segment declined to $19.8 million from $24 million recorded in the prior-year quarter.

Financial Position

Genuine Parts had cash and cash equivalents of $359.1 million as of Sep 30, 2018, up from $210.1 million as of Sep 30, 2017. As of Sep 30, 2018, long-term debt increased to $2.5 billion from $550 million as of Sep 30, 2017.

Guidance

For full-year 2018, Genuine Parts raised the sales growth-rate expectation to 14-15% from the previous expectation of 13-14%. The company revised its adjusted earnings per share expectation of $5.6-$5.70 from the earlier expectation of $5.6-$5.75.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

Currently, Genuine Parts has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Genuine Parts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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