Will Genuine Parts (GPC) Disappoint Q3 Earnings Estimates?

Genuine Parts CompanyGPC is set to report third-quarter 2015 results on Oct 19. In the last quarter, the company had posted a negative earnings surprise of 3.03%. Let us see how things are shaping up for this announcement.

Factors Influencing this 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- and bottom-line growth. Moreover, the recent acquisitions, including those of JAL Associate and Miller Bearing, should drive sales. Also, acquisitions under the Automotive and Electrical segments should augment revenues in the third quarter.

However, Genuine Parts expects to face challenges in the Electrical/Electronic Materials segment in 2015 owing to the strengthening of the U.S. dollar that will likely impact exports and also lead to deflation in copper pricing.

Earnings Whispers

Our proven model does not conclusively show that Genuine Parts is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at -0.81%. This is because the Most Accurate estimate stands at $1.22, while the Zacks Consensus Estimate is pegged at $1.23.

Zacks Rank: Genuine Parts carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Advance Auto Parts Inc. AAP has an Earnings ESP of +1.94% and a Zacks Rank #2 (Buy). The company's third-quarter 2015 financial results are scheduled for release on Nov 12.

General Motors Company GM has an Earnings ESP of +1.74% and a Zacks Rank #3 (Hold). The company is expected to report third-quarter 2015 results on Oct 21.

American Axle & Manufacturing Holdings Inc. AXL has an Earnings ESP of +5.88% and a Zacks Rank #3 (Strong Buy). The company is expected to release third-quarter 2015 earnings results on Oct 30.

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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 Nasdaq, Inc.

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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 Nasdaq, Inc.

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