Genuine Parts (GPC) To Acquire Full Ownership Of Inenco

Genuine Parts Company (NYSE:GPC) will acquire the outstanding 65% stake in Sydney, Australia-based Inenco Group (‘Inenco’). After completing the acquisition, Genuine Parts will have 100% ownership in Inenco. Prior to this, on Apr 3, 2017, the company bought 35% stake in Australia-based Inenco. The recent majority stake acquisition will be funded through a combination of cash and borrowings. Subject to the fulfillment of customary closing conditions, the deal is likely to close on Jul 1, 2019.

Founded in 1954, Inenco is among the top industrial distributors of bearings, power transmission and seals. It has presence across Australia, New Zealand and Asia, with more than 160 locations. This industrial supplier in Australia is expected to generate $400 million in annual revenues.

Owning 100% stake in the leading industrial distributor of Australasia will support Genuine Parts’ plan of expanding in the world’s rapidly growing marketplace. Inenco’s skilled management is projected to be a good addition in Genuine Parts’ industrial portfolio. This is in sync with the company’s strategy of acquiring businesses to improve product offerings and strengthen its global platform to drive robust and sustainable sales growth.

Genuine Parts Company Price and Consensus

In the last reported quarter, Genuine Parts’ net sales increased 3.3% to $4.7 billion, of which acquisitions contributed 2%. In the third quarter of 2019, the company’ earnings and net sales missed the respective Zacks Consensus Estimate while witnessing year-over-year rise.

Price Performance

Over the past three months, shares of Genuine Parts have lost 8.8% compared with the industry’s decline of 7.1%.

Zacks Rank & Stocks to Consider

Genuine Parts currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are Cummins Inc. (NYSE:CMI) , Ford Motor Company (NYSE:F) and AB Volvo (OTC:VLVLY) . Cummins and Ford currently carry a Zacks Rank #2 (Buy) while Volvo sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cummins has an expected long-term growth rate of 8.4%. The stock has gained 11.1% in the past six months.

Ford has an expected long-term growth rate of 7.3%. The stock has gained 6.1% in the past six months.

Volvo has an expected long-term growth rate of 5%. Over the past six months, shares of the company have gained 3.4%.

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