Genuine Parts (GPC) Q4 Earnings Beat Estimates, Up Y/Y

Genuine Parts Company GPC reported adjusted earnings of $1.12 per share, beating the Zacks Consensus Estimate of $1.11. Adjusted earnings per share in the year-ago quarter were $1.02.

The company recorded net income of $108.2 million in fourth-quarter 2017, down from $152.5 million in the prior-year quarter.

Genuine Parts reported net sales of $4.21 billion, up 11.3% year over year. The figure also surpassed the Zacks Consensus Estimate of $4.09 billion. Alliance Automotive Group (AAG), which was acquired in November 2017, contributed 6.8% in the sales figure.

Genuine Parts Company Price, Consensus and EPS Surprise

Genuine Parts Company Price, Consensus and EPS Surprise | Genuine Parts Company Quote

Operating profit increased to $313.3 million from $276.3 million in fourth-quarter 2016. Selling, administrative and other expenses rose to $1 billion from $856 million a year ago.

Full-Year 2017 Results

Genuine Parts reported adjusted earnings of $4.18 per share in 2017, down from $4.59 per share earned in 2016. The Zacks Consensus Estimate for earnings was $4.63 per share.

Net income was $617 million, down from $687 million in the prior year. Revenues increased to $16.3 billion from $15.3 billion in the prior-year. The figure also surpassed Zacks Consensus Estimate of $16.14 billion.

Segment Results

Revenues from the Automotive segment improved 16.7% to $2.3 billion from the year-ago figure of $1.9 billion. Moreover, the segment’s operating profit rose to $183.2 million in the reported quarter from $160 million a year ago.

Revenues at the Motion Industries or Industrial segment increased 7.4% to $1.24 billion. Operating profit at the segment was $102 million, up from $81 million in the year-ago quarter.

The Electrical or EIS segment’s revenues rose 8.9% year over year to $193 million. Operating profit, however, decreased to $13.5 million from $15.4 million in the year-ago quarter.

The S. P. Richards or Business Products segment’s revenues declined 2.2% to $467 million. Operating profit at the segment declined to $13.7million from $19.9 million recorded in the prior-year quarter.

Financial Position

Genuine Parts had cash and cash equivalents of $315 million as of Dec 31, 2017, up from $243 million as of Dec 31, 2016. Long-term debt increased to $2.6 billion as of Dec 31, 2017, from $550 million as of Dec 31, 2016.

In fourth-quarter 2017, capital expenditures decreased to $54.6 million from $74 million, in the year-ago period.

Dividend

The company reported that its board has approved a 7% increase in its quarterly cash dividend on common stock to 72 cents per share. The revised dividend will be paid on Apr 2 to shareholders of record as of Mar 9, 2017.

Guidance

For full-year 2018, Genuine Parts expects revenue growth rate in the range of 12-13%, whereas adjusted earnings per share are projected to be in the range of $5.6-$5.75. These anticipations include the benefits AAG’s full-year operations and roughly $80-$90 million in lower income taxes.

Zacks Rank & Other Key Picks

Genuine Parts has a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space are LKQ Corp. LKQ, PACCAR Inc. PCAR and AB Volvo VLVLY. LKQ and PACCAR sport a Zacks Rank #1 (Strong Buy), while Volvo carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

LKQ Corp. has an expected long-term growth rate of 16%. In the last six months, shares of the company have jumped 22.6%.

PACCAR has an expected long-term growth rate of 10%. In the last six months, shares of the company have gained 8.7%.

Volvo has an expected long-term growth rate of 15%. Over a year, shares of the company have rallied 45.1%.

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