Genuine Parts: A Real Value?

08/14/2020 5:00 am EST


Hilary Kramer

Editor, GameChangers

Genuine Parts (GPC) reported second-quarter earnings per share (EPS) of $1.32 vs. $1.47 in the prior year, observes Hilary Kramer, editor of Value Authority — and a participant in MoneyShow's Virtual Expo on August 18-20. Register for free here.

Results were $0.32 better than expectations, as the company aggressively cut costs relating to sales and administration in response to lower demand.

Revenues were down 14.2% in the quarter, or 13.7% when excluding the impact of acquisitions, divestitures and currency fluctuations.

On the conference call, the company indicated that July sales were positive, with automotive group sales up 6%.

While industrial group sales were still down by double-digit-percentages, the company expects the recent improvement in manufacturing data to flow to their operations.

I believe that GPC is managing the COVID-19 crisis well. The way that profitability held on, despite the sharp decline in sales in the quarter, was impressive.

While the company is still withholding guidance due to a high level of economic uncertainty, I believe that EPS can improve to $5 next year from an expected $4.50 this year.

Achieving this level of profitability can bring the stock close to my $100 target. GPC is a buy below $85. My target is $100. The 3.47% dividend yield will add to total returns.

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