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What's in Store for Genuine Parts (GPC) This Earnings Season?

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Genuine Parts Company (GPC - Free Report) is slated to release fourth-quarter 2019 results on Feb 19, before the opening bell. The Zacks Consensus Estimate for the quarter to be reported is a profit of $1.31 on revenues of $4.69 billion.

The Atlanta-based automotive replacement parts supplier reported better-than-expected results in the last reported quarter, thanks to the PartsPoint, Inenco and Alliance Automotive Group buyouts.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on two occasions for as many misses, the average negative surprise being 0.99%. This is depicted in the graph below:

Genuine Parts Company Price and Consensus

Which Way are Top- and Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for the fourth-quarter earnings per share has been unrevised at $1.31 for the past 30 days. This indicates a marginal decline from the year-ago reported earnings of $1.35 per share. The Zacks Consensus Estimate for revenues is pegged at $4.69 billion, suggesting 1.83% year-over-year growth.

Factors Setting the Tone

Genuine Parts’ quarterly results will likely reflect positive impact of the company’s acquisitions to improve product offerings and expand geographical footprint. The company is expected to have registered sales growth in the automotive parts business, especially in the United States, Australasia and Canada. Genuine Parts’ acquisition of PartsPoint and Inenco, completed a few months back, are likely to have contributed to its operating margin, and consequently, the bottom line. Further, Alliance Automotive’s deal to acquire Todd Group, in a bid to expand heavy-duty parts and service offerings, bodes well. The buyouts of Axis New England and Axis NewYork are likely to have benefited Genuine Parts’ Industrial Parts Group’s quarterly performance.

Genuine Parts’ ramped-up investment in Sparesbox is likely to have bolstered the firm’s digital sales capabilities in Australasia, and potentially across all its global operations during the period under discussion.

While solid execution of sales initiatives and robust fundamentals for the after-market are likely to have buoyed the firm’s quarterly performance, softness in European markets and unfavorable forex translations might have clipped its profits to some extent.

Key Development During the Quarter

During the quarter, the company announced the decision to divest its wholly-owned subsidiary EIS to Audax Private Equity, in a bid to streamline portfolio and use the proceeds to tap into other growth opportunities.

What the Zacks Model Says

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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Genuine Parts has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.31.

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 companies, which, according to our model, have the right combination of elements to post an earnings beat in the to-be-reported quarter.

LKQ Corporation LKQ is scheduled to report fourth-quarter figures on Feb 20. The stock has an Earnings ESP of +1.68% and carries a Zacks Rank #3, currently.

Visteon Corporation VC is set to release quarterly numbers on Feb 20. The company has an Earnings ESP of +2.63% and carries a Zacks Rank of 3, at present.

Magna International Inc. MGA has an Earnings ESP of +1.06% and is currently a Zacks #3 Ranked player. The company is slated to report quarterly results on Feb 21.

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