Genuine Parts Company (GPC) has posted a 13% rise in profit to $100.6 million or 63 cents per share in the fourth quarter of 2009 from $89.2 million or 56 cents in the prior-year quarter. With this, the company has just exceeded the Zacks Consensus Estimate of 62 cents per share. Sales in the quarter rose 6% to $2.6 billion.
Besides the Automotive Parts segment, Genuine Parts’ Industrial Parts and Electrical/Electronic Material segments have shown an improvement during the quarter, driven by a revival in the market conditions. Both segments have been severely affected by the sluggish economy for the last several quarters.
Sales in the Automotive Parts segment increased 6% to $1.3 billion, the Industrial Parts segment escalated 9% to $803 million and the Electrical segment went up 16% to $100 million. However, sales in the Office Products segment slid marginally by 1% to $411 million.
Financial Position
Genuine Parts had cash and cash equivalents of $334 million as of March 31, 2009, a significant increase from $133 million as of the same period a year ago. Long-term debt remained unchanged at $500 million as of that date. The company’s long-term debt to capitalization ratio decreased to 16% from 18% as of March 31, 2009.
However, Genuine Parts’ net cash flow from operations decreased to $140 million from $200 million in the prior-year period, driven by unfavorable adjustments for share-based compensation and others. Meanwhile, capital expenditures reduced to $9.8 million from $14.1 million a year ago.
Estimate Revisions Trend
Over the last 30 days, out of the 10 analysts covering the stock, 3 analysts have revised upward their estimates for full year 2010, while none has revised it downward. Over the last 7 days, only one analyst has revised upward the estimate for the year, while none has revised it downward.
However, in the absence of any revision of estimate from the majority of analysts, we continue with our Zacks #3 Rank (Hold) and our long-term Neutral recommendation on the stock.
With respect to earnings surprises, the stock has performed consistently well over the trailing four quarters. The average earnings surprise was 10.95%. This implies that Genuine Parts has beaten the Zacks Consensus Estimate by the same magnitude over the last four quarters.
The current Zacks Consensus Estimates for the second quarter and full-year 2010 are profits of 72 cents per share and $2.68 per share, respectively. The upside potential of these estimates, essentially a proxy for future earnings surprises, currently stands at 2.78% and 1.12%, respectively.
Read the full analyst report on “GPC”
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