Genuine Parts Company Faces Earnings Decline Ahead of Report

Genuine Parts Company is set to report disappointing earnings, with EPS expected to drop significantly. Analysts remain cautiously optimistic about its stock despite recent underperformance compared to market indices.

Date: 22-01-2025

AI Rating: 4

The report reveals concerning trends for Genuine Parts Company (GPC), particularly in terms of earnings per share (EPS) and overall financial performance. In the upcoming fourth-quarter results, analysts project a non-GAAP profit of $1.54 per share, which marks a substantial decline of 31.9% from the previous year's $2.26 per share. This decline may negatively impact investor sentiment as it indicates a significant downward trend in profitability.

Furthermore, the company's adjusted EPS for the last reported quarter experienced a drop of 24.5% year-over-year to $1.88, which was below analysts' expectations by nearly 23%. For fiscal 2024, GPC is anticipated to report an adjusted EPS of $8.09, a decrease of 13.3% from $9.33 in fiscal 2023. Although there is a modest expectation for growth in fiscal 2025 with an EPS of $8.30, the overall trend portrays a concerning outlook.

Revenue growth has diminished, as evidenced by a modest 2.5% year-over-year increase in net sales to nearly $6 billion, which also fell short of Wall Street's expectations. The company has faced increased operational costs, with selling, general, and administrative expenses rising by 11% to $1.7 billion, further compounding its challenging financial landscape.

Investor confidence appears to be shaken due to these factors, particularly following a previous 21% decline in stock prices after Q3 results were released. The expectation of softness in industrial sales growth has led to a downward revision of full-year revenue growth guidance, which adds to investor concerns. Despite these challenges, analysts maintain a consensus "Moderate Buy" rating, suggesting a potential upside of 12.2% based on the mean price target of $134.70.

Stocks: GPC SPX XLY