Genuine Parts (GPC) Misses Q3 Earnings, Lowers Guidance

Genuine Parts Company (NYSE:GPC) reported earnings of $1.24 per share in third-quarter 2016, flat with the year-ago quarter. Earnings per share, however, missed the Zacks Consensus Estimate of $1.29.

The company recorded net income of $185.3 million in the third quarter of 2016, down from $188 million in the prior-year quarter.

Revenues in the reported quarter rose 0.5% year over year to $3.94 billion but lagged the Zacks Consensus Estimate of $4.04 billion. Acquisitions contributed 3.5% to sales but currency had no impact on the same.

Operating profit decreased to $328 million from $348.5 million in the third quarter of 2015. Selling, general and administrative expenses rose to $869.6 million from $834.4 million a year ago.

Segment Results

Revenues at the Automotive Parts segment improved 1.5% to $2.1 billion from the year-ago level of $2.06 billion. The improvement was driven by acquisitions and currency tailwinds, partially offset by lower core sales. The segment’s operating profit decreased to $197.9 million in the reported quarter from $202 million a year ago.

Revenues at the Motion Industries or Industrial segment dropped 0.7% to $1.16 billion owing to lower sales volume, partially offset by synergies from acquisitions. Operating profit at the segment was $85.6 million, down from $90.1 million in the year-ago quarter.

The Electrical or EIS segment’s revenues fell 9% to $178.4 million. Operating profit decreased to $14.3 million from $20 million in the year-ago quarter.

The S. P. Richards or Office Products segment’s revenues improved 5% to $535.2 million, driven by benefits from acquisitions, partially offset by lower sales volume. Operating profit at the segment declined to $30.3 million from $36.4 million a year ago.

Financial Position

Genuine Parts had cash and cash equivalents of $225.2 million as of Sep 30, 2016, up from $199.3 million as of Sep 30, 2015. Long-term debt declined to $300 million as of Sep 30, 2016, from $500 million as of Sep 30, 2015.

In the first nine months of 2016, Genuine Parts’ net cash flow from operations decreased to $741.4 million from $896 million in the prior-year period. Capital expenditures increased to $36.9 million from $24.5 million a year ago.

Guidance

For 2016, Genuine Parts expects annual revenue to range from flat to up 1% from 2015, lower than the previous expectation of 1%–2% improvement. Earnings per share in 2016 are expected to be in the range of $4.55–$4.60 compared to the previous projection of $4.70–$4.75.

Zacks Rank

Genuine Parts currently carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (NASDAQ:GT) , Tata Motors Limited (NYSE:TTM) and Standard Motor Products Inc. (NYSE:SMP) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

The Goodyear Tire & Rubber Company has seen its earnings estimates move north over the last 60 days.

Tata Motors Limited has a long-term expected growth rate of 3.60%.

Standard Motor Products Inc. has a long-term expected growth rate of 15%.

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