It has been about a month since the last earnings report for Genuine Parts (GPC). Shares have added about 4.9% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Genuine Parts Q2 Earnngs & Sales Drop Y/Y
Genuine Parts reported adjusted earnings of $1.32 per share in second-quarter 2020 results, beating the Zacks Consensus Estimate of $1. The bottom line, however, declined from the year-ago profit of $1.47 a share. Weak contribution across both segments of the company induced this underperformance. High operating costs also dragged down profits.
Genuine Parts reported net sales of $3,823.2 million, missing the Zacks Consensus Estimate of $4,450 million. The top line also decreased 14% year over year. Net sales included contribution of 4.2% from prior-year acquisitions, offset by a 13.7% comparable sales decrease, a 0.6% negative impact from foreign-currency translation and a 4.1% impact of the divestiture of certain businesses.
The Automotive segment’s net sales came in at $2,495.8 million, down from $2776.2 million in the prior-year quarter. The segment’s comparable sales declined 12.6% in the second quarter. The segment’s operating profit decreased to $218.9 million in the reported quarter from the prior year’s $228.7 million.
The Industrial Parts segment’s net sales dropped 21.1% from the year-ago quarter to $1,327.4 million. The segment’s comparable sales declined 16.7% in the period. Resultantly, operating profit fell to $108.9 million from the year-earlier quarter’s $136.3 million.
Total operating expenses rose 32.3% during the quarter under review, primarily due to goodwill impairment charge and restructuring costs of $506.7 million and $25 million, respectively.
Genuine Parts had cash and cash equivalents worth$983.8 million as of Jun 30, 2020. Long-term debt decreased to $2,727.9 million from $2,871.1 million recorded in the year-ago period.
The company returned $114 million to its shareholders during the reported quarter in the form of quarterly dividends. However, it suspended its existing share-repurchase program until further notice amid the coronavirus crisis.
The auto parts maker also refrained from providing full-year guidance amid coronavirus-led uncertainty.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 37.68% due to these changes.
Currently, Genuine Parts has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Genuine Parts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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