Genuine Parts (GPC) Q3 Earnings Lag Estimates, Revenues Beat

Genuine Parts Company (NYSE:GPC) reported earnings of $1.08 per share in the third quarter of 2017 compared with $1.24 recorded in the year-ago quarter. Adjusted earnings came in at $1.16 per share, which missed the Zacks Consensus Estimate of $1.28.

The company recorded net income of $158.4 million in the third quarter of 2017, down from $185.3 million in the prior-year quarter.

Genuine Parts reported revenues of $4.09 billion, up 3.9% year over year. The Zacks Consensus Estimate for revenues was $4.08 billion. Operating profit decreased to $310.3 million from $328 million in the third quarter of 2016. Selling, general and administrative expenses rose to $940.3 million from $869.6 million a year ago.

Segment Results

Revenues from the Automotive Parts segment improved 3.6% to $2.2 billion from the year-ago level of $2.1 billion. The segment’s operating profit however decreased to $178.2 million in the reported quarter from $197.9 million a year ago.

Revenues at the Motion Industries or Industrial segment increased 7.1% to $1.24 billion. Operating profit at the segment was $94.6 million, up from $85.6 million in the year-ago quarter.

The Electrical or EIS segment’s revenues rose 11.6% year over year to $199.2 million. Operating profit, however, decreased to $13.5 million from $14.3 million in the year-ago quarter.

The S. P. Richards or Office Products segment’s revenues declined 4.7% to $510 million. Operating profit at the segment declined to $24 million from $30.3 million recorded in the prior-year quarter.

Financial Position

Genuine Parts had cash and cash equivalents of $210.1 million as of Sep 30, 2017, down from $225.2 million as of Sep 30, 2016. Long-term debt increased to $550 million as of Sep 30, 2017 from $300 million as of Sep 30, 2016.

In third-quarter 2017, capital expenditure increased to $43.1 million from $36.9 million, in the year-ago period.

Guidance

For 2017, Genuine Parts raised its revenue growth rate from the range of 3%–4% to 4%–4.5%. Adjusted earnings per share in 2017 are expected to be in the range of $4.55–$4.60.

Genuine Parts currently has a Zacks Rank #3 (Hold)

Better-ranked stocks in the auto space include Ferrari N.V. (NYSE:RACE) , Cummins Inc. (NYSE:CMI) and Continental AG (OTC:CTTAY) . While Ferrari sports a Zacks Rank #1 (Strong Buy), Cummins and Continental AG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari has an expected long-term growth rate of 14.1%.

Cummins has an expected growth rate of around 12% in the long term.

Continental has an expected long-term growth rate of 7.1%.

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