Genuine Parts Earnings Beat Ests, Revs in Line - Analyst Blog

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Genuine Parts Company 's ( GPC ) earnings per share increased 4.3% year over year to 97 cents in the fourth quarter of 2013 from 93 cents reported in the year-ago quarter (including one-time pension gain of 10 cents per share). The earnings surpassed the Zacks Consensus Estimate of 92 cents.

Revenues in the quarter grew 12.8% to $3.5 billion, in line with the Zacks Consensus Estimate. The year-over-year improvement in revenues can be attributed to the benefits from acquisitions, partially offset by currency headwind.

Operating profit increased 8.6% to $271 million from $249.4 million in the fourth quarter of 2012. Selling, general and administrative expenses rose 29.5% to $820.6 million from $633.7 million a year ago.

Revenues in the Automotive Parts segment grew 25.1% to $1.9 billion. The segment's operating profit rose 25.6% to $153.9 million in the quarter from $122.5 year ago.

Revenues in the Motion Industries or Industrial segment went up 2.9% to $1.09 billion, S. P. Richards or Office Products segment revenues fell 4.3% to $385.8 million and Electrical segment or EIS segment revenues rose 6.3% to $143.9 million.

Operating profits in the Motion Industries or Industrial segment dipped 6.1% to $73.3 million. Operating profits in the S. P. Richards or Office Products segment fell 13.6% to $31.4 million and in the Electrical segment or EIS segment decreased 1.4% to $12.3 million in the quarter.

Fiscal 2013 Performance

Genuine Parts' adjusted earnings increased 3.5% to $4.19 per share for full-year 2013 from $4.05 in 2012, exceeding the Zacks Consensus Estimate of $4.14. Revenues for full-year 2013 rose 8.2% to $14.1 billion from $13 billion in 2012, beating the Zacks Consensus Estimate of $14 billion. The rise reflects an 18.5% increase in automotive sales partially offset by a combined 1% sales decrease in non-automotive businesses.    

Financial Position

Genuine Parts had cash and cash equivalents of $196.9 million as of Dec 31, 2013, down from $403.1 million as of Dec 31, 2012. Long-term debt increased to $764.7 million as of Dec 31, 2013, from $500.0 million as of Dec 31, 2012.

During 2013, Genuine Parts' net cash flow from operations improved to $1.1 billion from $906.4 million in the same period last year. Capital expenditures increased to $124.1 million from $102 million in 2012.

Dividend

The board of directors of Genuine Parts declared a 7% hike in annual cash dividend in 2014 to $2.30 cents per share from $2.15. The quarterly dividend of 57.5 cents will be paid on Apr 1, 2014 to stockholders of record as of Mar 7, 2014.

Our Take

Genuine Parts has undertaken various initiatives to boost sales and earnings. It is poised to benefit from the recent strategic acquisition together with operating margin improvement plans. Strong balance sheet and cash flow will also support the company's future expansion strategies. However, weak profits in the company's Industrial, Electrical and Office Products segments are the long-term headwinds.

Genuine Parts Company is a prominent player in the automotive replacement parts industry with a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the automotive replacement industry are Remy International, Inc. ( REMY ), Motorcar Parts of America Inc. ( MPAA ) and LKQ Corp. ( LKQ ). Remy and Motorcar Parts sport a Zacks Rank #1 (Strong Buy) while LKQ carries a Zacks Rank #2 (Buy).



GENUINE PARTS (GPC): Free Stock Analysis Report

LKQ CORP (LKQ): Free Stock Analysis Report

MOTORCAR PARTS (MPAA): Free Stock Analysis Report

REMY INTL INC (REMY): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: GPC , LKQ , MPAA , REMY

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