Genuine Parts Company
(
GPC
) is set to release its third quarter 2012 results before the
market opens on October 18. The automotive replacement parts
distributor posted a profit of $1.08 per share in the second
quarter of 2012, in line with the Zacks Consensus Estimate. For
the upcoming quarter, the Zacks Consensus Estimate for the
company is $1.12 per share, reflecting an annualized estimated
growth of 15.5%.
With respect to earnings surprise, the company has outperformed
the Zacks Consensus Estimate in three of the trailing four
quarters and met the same in the other. It has delivered an
average earnings surprise of 4.6%, implying that it has beaten
the Zacks Consensus Estimate by the same magnitude.
The Zacks Consensus Estimates for full-year 2012 is $4.06,
implying an estimated year-over-year growth of 13.4%. The upside
potential of the third quarter and full year estimates,
essentially a proxy for future earnings surprises, would be about
-0.89% and -0.25%, respectively.
Second Quarter Review
Genuine Parts reported an 11.1% rise in profits to $168.6 million
in the quarter from $151.8 million in the year-ago quarter.
Earnings per share increased 12.5% to $1.08 from 96 cents in the
comparable quarter of 2011 and were in line with the Zacks
Consensus Estimate.
Revenues in the quarter grew 4.8% to $3.3 billion, slightly lower
than the Zacks Consensus Estimate of $3.4 billion. Operating
profit also increased 4.5% to $705.0 million from $674.6 million
a year ago, despite a 4% rise in selling, general and
administrative expenses to $680.2 million during the quarter.
Genuine Parts has undertaken various initiatives to boost sales
and earnings, such as product line expansion, penetration into
new markets and cost-saving activities. The company relies on a
diverse product portfolio for top-line and bottom-line growth.
Estimate Revisions Trend
Estimates for the third quarter have remained almost stable over
the past 60 days.
Agreement of Estimate Revisions
Over the last 30 days, none of the six analysts covering the
stock have revised the estimates upward while one analyst moved
it downward. Over the last 7 days, none of the analysts revised
the estimates for the quarter, implying the lack of near-term
catalysts for the stock. Estimates for 2012 depict the same
trend..
Magnitude of Estimate Revisions
Following the second quarter earnings release, estimates for the
third quarter and full year have decreased by a penny to $1.12
and $4.06, respectively.
Our Take
Based in Atlanta, Georgia Genuine Parts distributes automotive
and industrial replacement parts, office products and
electrical/electronic materials in the U.S., Canada and Mexico.
Its major competitors include
Advance Auto Parts
(
AAP
) and
AutoZone Inc.
(
AZO
).
Genuine Parts is likely to see higher sales and earnings due to
its product line expansion, penetration into new markets and
cost-saving activities. The company relies on a diverse product
portfolio for top-line and bottom-line growth. In addition,
rising demand in the Automotive Parts segment due to increase in
average age of vehicles on the road to almost 11 years will
enhance the company's profitability.
Currently, Genuine Parts retains a Zacks #4 Rank, which
translates into a short-term (1 to 3 months) Sell rating and we
have a long-term (more than 6 months) Neutral recommendation on
the stock.
ADVANCE AUTO PT (AAP): Free Stock Analysis
Report
AUTOZONE INC (AZO): Free Stock Analysis
Report
GENUINE PARTS (GPC): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research