Genuine Parts (GPC) Q2 Earnings Miss Estimates, In Line Y/Y

Genuine Parts Company (NYSE:GPC) reported earnings of $1.28 per share in second-quarter 2016, flat with the year-ago quarter. Earnings per share, however, missed the Zacks Consensus Estimate of $1.30.

The company recorded net income of $191.4 million in the second quarter of 2016, down from $195.4 million in the prior-year quarter.

Revenues in the reported quarter dropped 1% year over year to $3.90 billion and lagged the Zacks Consensus Estimate of $4.01 billion. The decline is attributable to a 1% negative currency impact, partially offset by benefits from acquisitions.

Operating profit decreased to $340.5 million from $349.4 million in the second quarter of 2015. Selling, general and administrative expenses fell to $829.5 million from $832.6 million a year ago.

Segment Results

Revenues at the Automotive Parts segment slipped 0.7% to $2.09 billion from the year-ago level of $2.10 billion. Revenues declined due to a drop in core automotive sales and currency headwinds, partially offset by benefits from acquisitions. The segment’s operating profit decreased to $203.6 million in the reported quarter from $207.4 million a year ago.

Revenues at the Motion Industries or Industrial segment dropped 1.7% to $1.17 billion owing to lower sales volume and currency headwinds, partially offset by synergies from acquisitions. Operating profit at the segment was $88.3 million, down from $88.9 million in the year-ago quarter.

The Electrical or EIS segment’s revenues fell 5% to $184.5 million due to the adverse impact of copper pricing. Operating profit decreased to $16 million from $18.6 million in the year-ago quarter.

The S. P. Richards or Office Products segment’s revenues improved 1% to $481.6 million, driven by benefits from acquisitions. Operating profit at the segment declined to $32.6 million from $34.5 million a year ago.

Financial Position

Genuine Parts had cash and cash equivalents of $233.6 million as of Jun 30, 2016, up from $223.8 million as of Jun 30, 2015. Long-term debt declined to $775 million as of Jun 30, 2016, from $850 million as of Jun 30, 2015.

In the first half of 2016, Genuine Parts’ net cash flow from operations improved to $533.5 million from $454.1 million in the prior-year period. Capital expenditures increased to $49.7 million from $37.5 million a year ago.

Guidance

For 2016, Genuine Parts expects annual revenue to improve 1%–2%. Earnings per share in 2016 are envisioned to be in the range of $4.70–$4.75 compared to the previous forecast of $4.70–$4.80.

Zacks Rank

Genuine Parts currently carries a Zacks Rank #2 (Buy).

Some other well-ranked automobile stocks include Commercial Vehicle Group Inc. (NASDAQ:CVGI) , Spartan Motors Inc. (NASDAQ:SPAR) and U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) , all carrying a Zacks Rank #2.