It has been about a month since the last earnings report for Genuine Parts (GPC). Shares have added about 22.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Genuine Parts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Genuine Parts Delivers a Dismal Q1 Show
Genuine Parts reported adjusted earnings of 92 cents per share in first-quarter 2020, missing the Zacks Consensus Estimate of $1.12. The bottom line also declined from the year-ago profit of $1.28 a share. Weak contribution across all segments resulted in this underperformance.
Genuine Parts reported net sales of $4.56 billion, missing the Zacks Consensus Estimate of $4.61 billion. The top line also decreased 3.8% year over year. Net sales included contribution of 5.3% from prior-year acquisitions, offset by a 3.5% comparable sales decrease, a 0.9% negative impact from foreign-currency translation and a 4.8% impact due to the divestiture of certain businesses.
The Automotive segment’s net sales came in at $2.58 billion, down 1.6% year over year. The segment’s comparable sales declined 5% during the first quarter. The segment’s operating profit decreased to $142.3 million in the reported quarter from the prior year’s $179.2 million.
The Industrial Parts segment’s net sales slid 7.7% from the year-ago quarter to $1.51 billion. The segment’s comparable sales declined 3.1%. Resultantly, operating profit decreased to $113.9 million from the year-earlier quarter’s $121 million.
The Business Products segment’s net sales fell to $468 million from the prior-year quarter’s $479.1 million recorded. The segment’s comparable sales inched up 1.5%. Operating profit of the segment fell to $20.2 million from the $21.2 million recorded in the prior-year period.
Genuine Parts had cash and cash equivalents of $354.5 million as of Mar 31, 2020, down from $356.9 million in the corresponding period of 2019. As of Mar 31, 2020, its long-term debt increased to $2.73 billion from the $2.39 billion witnessed in the year-ago period. The company’s long-term debt-to-capital ratio was 44.3% as of Mar 31, 2020.
Genuine Parts returned $207 million to shareholders during the March-end quarter, including $111 million in the form of quarterly dividends and $96 million in share repurchases. However, the company suspended its existing share-repurchase program until further notice amid the coronavirus crisis.
Genuine Parts scrapped the full-year 2020 guidance as it expects that the pandemic’s impact will strain the company’s operations in the days to come.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -31.77% due to these changes.
Currently, Genuine Parts has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren’t focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It’s no surprise Genuine Parts has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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