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Headquartered in Atlanta, Georgia, Genuine Parts Company (GPC) distributes automotive replacement parts and industrial parts and materials. Valued at a market cap of $16.9 billion, the company distributes equipment and parts to repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, and individuals.
This auto parts distributor’s shares have massively underperformed the broader market over the past 52 weeks. GPC has declined 15.8% over this time frame, while the broader S&P 500 Index ($SPX) has soared 20.7%. Nonetheless, the stock is up 4.2% on a YTD basis, outpacing SPX’s 2.2% gain during the same time frame.
Zooming in further, GPC has lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 22.3% return over the past 52 weeks but has outpaced XLY’s 2.7% decline on a YTD basis.
On Feb. 18, shares of GPC dropped 2.6% after its Q4 earnings release, despite delivering better-than-expected Q4 adjusted earnings of $1.61 per share and revenues of $5.8 billion. Moreover, its top line grew 3.3% from the year-ago quarter due to a 3.2% boost from acquisitions and a 0.6% impact from favorable foreign currency transactions.
However, GPC management expects weak market conditions to persist through the first half of this year, limiting growth. The company guided for a modest 2%–4% sales increase and projected adjusted EPS between $7.75 and $8.25, which fell short of analysts’ forecast of $8.29.
For the current fiscal year, ending in December, analysts expect Genuine Parts’ EPS to decline 2.7% year over year to $7.94. The company’s earnings surprise history is mixed. It topped the Wall Street estimates in two of the last four quarters, while missing on other two occasions.
Among the 11 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on three “Strong Buy,” and eight “Hold” ratings.
On Feb. 19, Truist Financial Corporation (TFC) maintained a “Buy” rating on Genuine Parts and raised its price target to $133, which indicates a 9.3% potential upside from the current levels.
The mean price target of $131.11 represents a 7.8% upside from GPC’s current price levels, while the Street-high price target of $155 suggests an upside potential of 27.4%.
