Tags: Genuine | Parts | sales | GPC

Genuine Parts: Record Sales in Hard Times

By    |   Friday, 28 Oct 2011 11:16 AM

In hard times, people hang onto their cars. Median vehicle age is now over 10 years in the United States, fueling record sales for auto parts retailers. Distributor Genuine Parts (GPC) is among that fortunate group. It’s the largest player in a highly fragmented, and growing, $90 billion automotive aftermarket.

The Atlanta-based company dishes out parts to 5,800 NAPA Auto Parts stores, accounting for half of last year’s revenues. Industrial parts, office products and electronics supplies make up the rest.

By wringing cash from car parts, Genuine Parts is prospering. It has pumped out rising earnings and sales for several years, including 2011. Third-quarter sales rose 11 percent to $3.3 billion, versus $2.9 billion a year ago. Net income climbed 15 percent. The automotive group posted 9 percent sales growth.

Analysts add that Genuine Parts is well-run. There’s strong cash flow and little debt. The distributor has also increased its dividend, currently 3.3 percent, for 55 consecutive years. Maximizing total return to investors is a priority, Genuine Parts CEO Thomas Gallagher has said.

Solid fundamentals

At a P/E of 17, some analysts believe that Genuine Parts is overvalued, though. Of the 12 analysts followed by Thomson/First Call, one has a strong buy recommendation and three have buys, with six holds and two underperforms.

S&P analysts have a hold rating, adding that the stock’s P/E is above average for its peers. Analysts do like the company’s healthy balance sheet and earnings stability, though.

The company reports next Feb. 22.

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In hard times, people hang onto their cars. Median vehicle age is now over 10 years in the United States, fueling record sales for auto parts retailers. Distributor Genuine Parts (GPC) is among that fortunate group. It s the largest player in a highly fragmented, and...
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2011-16-28
Friday, 28 Oct 2011 11:16 AM
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