Genuine Parts Company (GPC - Free Report) is set to report second-quarter 2019 results on Jul 18, before the opening bell.
In the last reported quarter, the company posted an earnings miss of 2.29%. Over the trailing four quarters, it surpassed earnings estimates twice while missed in the other two, the average surprise being 0.31%.
In the past three months, shares of Genuine Parts have outperformed the industry it belongs to. The stock fell 6.7% compared with 12.8% decline recorded by the industry.
Let’s see, how things have shaped up for the upcoming announcement.
Factors Influencing This Quarter
Genuine Parts regularly undertakes acquisitions to improve product offerings and expand the geographical footprint. In May, the company made the announcement to acquire the outstanding 65% stake in Sydney, Australia-based Inenco Group. After completing the acquisition, Genuine Parts will have 100% ownership in Inenco. Earlier, the company bought 35% stake in Inenco. These acquisition initiatives are likely to have some impact on the soon-to-be-released quarter’s results.
Further, solid execution of sales initiatives, sound fundamentals for the aftermarket and favorable weather conditions are projected to bode well for the company’s automotive parts business.
However, the presence in countries outside the United States makes Genuine Parts vulnerable to the negative impacts of foreign currency translation. Also, increasing debt majorly due to acquisitions is concerning for the company.
Our proven model does not conclusively predict that Genuine Parts is likely to beat on earnings this quarter. This is because, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Genuine Parts has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at $1.67. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 3, which increases the predictive power of ESP. However, this, combined with 0.00% Earnings ESP, makes a surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:
General Motors Company (GM - Free Report) currently has an Earnings ESP of +15.11% and a Zacks Rank of 3. Its second-quarter 2019 results are slated to release on Aug 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Cummins Inc. (CMI - Free Report) has an Earnings ESP of +3.67% and a Zacks Rank of 3 at present. Its second-quarter 2019 results are scheduled to release on Jul 30.
Veoneer, Inc. (VNE - Free Report) presently has an Earnings ESP of +2.31% and a Zacks Rank of 3. Its second-quarter 2019 results are scheduled to release on Jul 26.
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