Genuine Parts Company GPC delivered fourth-quarter 2023 adjusted earnings of $2.26 per share, up 10.2% year over year. The bottom line surpassed the Zacks Consensus Estimate of $2.20 per share. Higher-than-expected profit from the Industrial Parts segment resulted in the outperformance.
The company reported net sales of $5.59 billion, lagging the Zacks Consensus Estimate of $5.63 billion. The top line, however, rose 1.2% year over year. The year-over-year rise in revenues largely resulted from increased comparable sales across the Industrial Parts segment and benefits from acquisitions and a net favorable impact of foreign currency translation.
Genuine Parts Company Price, Consensus and EPS Surprise
Genuine Parts Company price-consensus-eps-surprise-chart | Genuine Parts Company Quote
Segmental Performance
The Automotive segment’s net sales totaled $3.46 billion in the reported quarter. The top line rose 0.8% year over year on the back of forex and acquisition benefits but marginally lagged our estimate of $3.49 billion. The segment’s comparable sales fell 2.7% year over year. Operating profit decreased 12.2% to $259 million and missed our forecast of $297 million. Segment profit margin came in at 7.5%, down 110 basis points compared with the year-ago period.
The Industrial Parts segment’s net sales totaled $2.13 billion. The top line rose 1.7% year over year on comparable sales growth and acquisition benefits but lagged our estimate of $2.17 billion. The segment’s comparable sales increased 1.2% in the reported quarter. Operating profit rose 19.3% from the prior-year quarter to $275 million, beating our forecast of $260.3 million. The profit margin of 12.9% expanded 190 basis points year over year in the fourth quarter of 2023.
Financial Performance
Genuine Parts had cash and cash equivalents worth $1.1 billion as of Dec 31, 2023, up from $653.5 million as of Dec 31, 2022. Long-term debt increased to $3.6 billion from $3.08 billion as of Dec 31, 2022. The company exited the fourth quarter with $2.6 billion in total liquidity, comprising $1.5 billion on the revolving credit facility and the remainder as cash/cash equivalents. The company generated free cash flow (FCF) of $190 million in the quarter under review.
2024 Guidance
For 2024, Genuine Parts expects revenues from automotive and industrial sales to witness year-over-year upticks of 2-4% and 3-5%, respectively. Overall sales growth is projected to be 3-5%. The company envisions adjusted earnings of $9.70-$9.90 per share. The operating cash flow is expected to be $1.3-$1.5 billion. The guidance for FCF is pegged between $800 million and $1 billion.
Zacks Rank & Key Picks
GPC currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Modine Manufacturing Company MOD, NIO Inc. NIO and Oshkosh Corporation OSK. MOD sports a Zacks Rank #1 (Strong Buy), and NIO and OSK carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MOD’s 2024 sales and earnings suggests year-over-year growth of 4% and 67.2%, respectively. The earnings per share (EPS) estimates for 2024 and 2025 have improved 22 cents each in the past 30 days.
The Zacks Consensus Estimate for NIO’s 2023 sales implies year-over-year growth of 10.4%. The EPS estimates for 2024 have improved 7 cents in the past 30 days.
The Zacks Consensus Estimate for OSK’s 2024 sales and earnings suggests year-over-year growth of 6.7% and 4%, respectively. The EPS estimates for 2024 and 2025 have improved 16 cents and 29 cents, respectively, in the past 30 days.
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