Genuine Parts guided higher early Thursday after an earnings beat for the third quarter, with growth across automotive and industrial sales offset by currency headwinds. GPC stock eased.
O'Reilly Auto Parts and LKQ follow next week. Investors can gain some insights into one of the hotter areas of the retail space from the Genuine Parts earnings report.
"We are encouraged by the impressive revenue growth, given the 5.6% headwind to the automotive segment and 0.9% headwind to the industrial segment from the current foreign exchange environment," Stephens analyst Daniel Imbro wrote in an early Thursday note. He rates GPC stock at equal weight with price target and estimates under review.
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Genuine Parts Earnings
Estimates: Analysts polled by FactSet expect a 9% EPS increase to $2.05 on an 11% revenue increase to $5.369 billion.
Results: Early Thursday, Genuine Parts EPS came in at $2.23 and revenue at $5.675 billion. Year over year, Genuine Parts earning rose 19% and sales grew 18%. Automotive replacement parts sales rose 9% to $3.5 billion. Industrial replacement parts sales jumped 35% to $2.2 billion.
Outlook: GPC raised its full-year guidance, accounting for this quarter's beat. It's now calling for EPS of $8.05 to $8.15, up from $7.80 to $7.95 prior. It now forecasts revenue growth of 15% to 16%, up from 12% to 14% earlier.
GPC Stock
Shares fell 0.7% to 157.87 on the stock market today, but pared losses after undercutting its 50-day line intraday. GPC stock sits less than 5% below a 165.09 flat-base buy point after a three-week rally. It is a solid watchlist candidate — investors should not be considering new buys until the stock market confirms a new uptrend.
The RS line for Genuine Parts stock has rallied sharply to highs since the flat base began to form around mid-September, a positive sign in the current volatile market.
IBD ranks GPC stock No. 1 in the auto parts retail group in terms of several key ratings. The stock earns a Relative Strength Rating of 94 and a Composite Rating of 98, out of a best-possible 99.
GPC stock, ORLY stock and LKQ stock have all rallied into the earnings season. Each is approaching a buy point. However, all three stocks fell amid a broad sell-off Wednesday.
Their recent rallies, against the backdrop of a struggling general market, have lifted the relative strength lines for all three auto retail stocks, as well as AutoZone, to new highs on their weekly MarketSmith charts. A blue dot at the end of the RS lines marks the new highs.
Retailers at large are showing flashes of spirit ahead of the holiday season. Genuine Parts, O'Reilly and AutoZone are also benefiting as investors seek shelter in defensive growth names amid volatility.
IBD featured AZO stock in an IBD Stock Of The Day column on Oct. 13.
Scrambled supply chains have caused major upheaval in auto industry supply and demand, sending prices for new and used cars to record levels. This has made consumers more likely to hang on to their existing vehicles for longer, driving mileage higher and boosting demand for auto replacement parts.
Other auto parts retail earnings:
- Late Oct. 26, O'Reilly is likely to report a 5% EPS increase to $8.47 on a 7% sales gain to $3.711 billion. Same-store sales are seen increasing 4.8%, up slightly from the prior quarter but down from a 6.7% increase a year ago.
- Early Oct. 27, LKQ should report a 6% EPS decline to 96 cents on a 3% sales drop to $3.213 billion. Same-store sales are seen increasing 4.2%, down from 6.2% a year ago.
Early Wednesday, auto retailer Lithia Motors missed on both earnings and sales, citing negative foreign-exchange impact. Shares tumbled more than 6%.
Genuine Parts derives roughly a third of its revenue from outside the U.S. A strong dollar could therefore weigh on Genuine Parts earnings.
