Genuine Parts Company Faces Challenges Ahead of Earnings Report
Genuine Parts Company (GPC), based in Atlanta, Georgia, stands as a major player in the global market for automotive and industrial replacement parts. With a market capitalization of $16.5 billion, GPC manages over 10,700 locations across 17 countries and employs more than 60,000 individuals worldwide. The company is set to announce its fourth-quarter results on Thursday, February 20.
Analysts Forecast Decline in Earnings
In anticipation of the earnings report, analysts predict that GPC will present a non-GAAP profit of $1.54 per share, marking a significant drop of 31.9% from the $2.26 per share reported in the same quarter last year. Over the past four quarters, GPC has encountered mixed results, missing Wall Street’s earnings expectations twice while exceeding them on two occasions. The adjusted earnings per share (EPS) for the last reported quarter fell by 24.5% year-over-year to $1.88, missing analysts’ estimates by approximately 23%.
Future Earnings Projections
For fiscal year 2024, GPC’s adjusted EPS is expected to reach $8.09, down 13.3% from $9.33 in fiscal 2023. However, a modest increase of 2.6% is anticipated for fiscal year 2025, with projected earnings of $8.30 per share.
Stock Performance Falls Short
Over the last 52 weeks, Genuine Parts’ stock has declined by 15.5%, significantly underperforming compared to the S&P 500 Index’s ($SPX) gain of 25% and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) return of 32% during the same period.
Impact of Q3 Results on Investor Sentiment
Following the release of disappointing third-quarter results on October 22, GPC’s stock plummeted nearly 21%. The company reported modest year-over-year growth in net sales of 2.5%, totaling nearly $6 billion, which fell short of Wall Street’s expectations. This shortfall was compounded by an 11% rise in selling, general, and administrative expenses, reaching $1.7 billion, along with a restructuring cost of $41 million. As a result, operating income dropped dramatically by 30.8% year-over-year to $321.9 million.
In light of decreasing profits and anticipated challenges in industrial sales growth, Genuine Parts has revised its full-year revenue guidance and earnings forecasts, raising concerns among investors.
Analysts Remain Cautiously Optimistic
Despite these challenges, analysts hold a moderately optimistic view of GPC’s future. The stock carries a consensus “Moderate Buy” rating among analysts, with three analysts recommending a “Strong Buy” and eight opting for a “Hold.” Furthermore, the mean price target for GPC stands at $134.70, presenting a 12.2% upside potential relative to current prices.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data provided are for informational purposes only. For more details, please refer to the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
