Topic: Growth Stocks

GENUINE PARTS CO. $78 – New York symbol GPC

GENUINE PARTS CO. $78 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 154.9 million; Market cap: $12.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) gets half of its sales and earnings by selling auto parts. The company operates 1,300 of its own outlets under the NAPA banner, and its distribution business serves 4,750 independent stores across North America.

Genuine also distributes industrial parts, office furniture and electrical equipment.

In the three months ended September 30, 2013, revenue rose 9.2%, to a record $3.7 billion from $3.4 billion a year earlier. The gain is mainly because Genuine bought the 70% of an Australian auto parts distributor that it didn’t already own last April. The company paid $820 million for this additional stake. However, revenue fell 2.5% at the industrial parts division, 3.1% at office products and 5.3% at electrical materials.

Even with the higher overall revenue, earnings rose just 0.5%, to $173.7 million, or $1.12 a share. A year earlier, Genuine earned $172.9 million, or $1.11.

The stock trades at 17.9 times the $4.36 a share that the company should earn in 2013. That’s a high p/e ratio for a cyclical distributor of industrial products. The $2.15 dividend yields 2.8%.

Genuine Parts is a hold.

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