It has been about a month since the last earnings report for Genuine Parts (GPC). Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Genuine Parts due for a breakout? 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 Q1 Earnings Miss Estimates, Rise Y/Y
Genuine Parts reported adjusted earnings of $1.28 per share in first-quarter 2019 compared with $1.27 in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate of $1.31. During the reported quarter, it witnessed positive comps across three business segments.
The company recorded net income of $160.3 million in first-quarter 2019, down from $176.6 million in the prior-year quarter.
Genuine Parts reported net sales of $4.74 billion, up 3.3% year over year. The figure missed the Zacks Consensus Estimate of $4.8 billion. Net sales included 3.3% comparable growth, roughly 2% from acquisitions, partly offset by 2% adverse impact of foreign currency translation.
Operating profit increased to $321 million from $318.5 million in first-quarter 2018. Selling, administrative and other expenses rose to $1.2 billion from $1.1 billion a year ago.
The Automotive segment’s net sales improved to $2.62 billion from the year-ago figure of $2.56 billion. However, the segment’s operating profit plunged to $179.2 million in the reported quarter from $184.7 million a year ago.
The Industrial Parts segment’s net sales rose to $1.64 billion from $1.55 billion in the year-ago quarter. Moreover, operating profit increased to $121 million from $112 million in the year-ago quarter.
The Business Products segment’s net sales rose to $479 million from $474.1 million recorded in the prior-year quarter. Operating profit for the segment declined to $21.2 million from $21.6 million recorded in the prior-year quarter.
Genuine Parts had cash and cash equivalents of $356.9 million as of Mar 31, 2019, up from $326 million as of Mar 31, 2018. As of Mar 31, 2019, long-term debt decreased to $2.4 billion from $2.6 billion as of Mar 31, 2018.
Genuine Parts reiterated its projection for 2019. The company expects sales to rise 3-4% and adjusted earnings per share to be $5.81-$5.96.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Genuine Parts has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. 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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