Genuine Parts (GPC) Dividend Stock Analysis

Genuine Parts Dividend

(updated on 11/12/2016)

Genuine Parts has paid a dividend since 1948 and increased its dividend for 59 consecutive years; qualifying the company as a Dividend King, Dividend Aristocrat, and Dividend Champion.

Price: $94.92
Current Dividend:  $2.63
Dividend Yield: 2.8%
Market Capitalization: 14.1 B
Enterprise Value:  14.6 B

Description

Sector: Consumer Cyclical
Industry: Specialty Retail

Genuine Parts (GPC) describes itself as “a service organization” divided into 4 groups:

Automotive Replacement Parts: NAPA Auto Parts
(Over 50% of GPC revenues. 6,000+ stores that distribute approximately 450,000 automotive replacement parts, accessory and service items.)

Industrial Replacement Parts: Motion Industries
(Over 5.6 million parts and related supplies including bearings, mechanical power transmission products, industrial and safety supplies, etc.)

Office Products: S.P. Richards
(Over 55,000 items including general office supplies, cleaning and breakroom supplies, disposable food service products, office furniture, school supplies, safety & security items, etc.)

Electrical/Electronic Materials: EIS, Inc:
(Over 100,000 items including wire and cable, insulating and conductive materials, assembly tools, and test equipment.)

SWOT Analysis – Genuine Parts

Strengths

Genuine Parts is a trusted brand with a large scale distribution system and convenient retail locations. Their reputation for part availability and fast delivery sets NAPA apart from smaller competitors. To replicate what GPC has built over the decades would require an investment that keeps competitors away (moat).

Weaknesses

In an environment where revenues have only been growing about 5% annually, GPC has to maintain its competitive advantages to prevent erosion of earnings power.

Opportunities

GPC continues to expand into new markets. Their 2013 investment in Australia and New Zealand is an attempt to diversify and expand their global reach.

Threats

Competition is always a factor that compels a successful company such as GPC to stay on top of margins, inventory, service, etc. GPC must continue improving and staying a step ahead of the competition.

Dividend Analyzer Checklist

(updated November 2016)

Dividend Safety Score (21/33 points)

Dividend Per Share (ttm): $2.59
Dividend Payout Ratio (ttm): 55%
Dividend Per Share (10 Year Growth): 7%
Cash From Operations (CFO) Per Share (ttm): $6.68
CFO Dividend Coverage (CFO / DPS): 2.6  (2/6 points)
Free Cash Flow (FCF) Per Share (ttm):  $5.79
FCF Dividend Coverage (FCF / DPS): 2.2  (4/6 points)
Net Financial Debt: $648 M
Total Assets:  $8749 m
Net Financial Debt / Total Assets:  7%  (10/12 points)
Net Financial Debt to EBITDA (ttm):  63%
Total Liabilities to Assets Ratio (Qtr.): 62%
Piotroski Score (1-9) (TTM): (5/9 points)

Profitability & Growth Score (29/33 points)

Revenue (10 Year Growth) *CAGR > 4.14%: 4.6% (4/4 points)
EPS Basic Cont. Operations (10 Year Growth) CAGR > 4.14%:  6.4% (4/4 points)
Cash From Operations (10 Year Growth) CAGR > 4.14%: 10.2%  (6/6 points)
Operating Earnings Yield (ttm):   8.3% (5/7 points)
Net Income (ttm):  $696 M
Gross Profit (ttm):   $4564 M
Total Assets: $8749 M
Gross Profitability Ratio = GP / Total Assets:  52%  (10/12 points)
Cash Return On Invested Capital (CROIC)(tttm): 22%
Return on Invested Capital (ROIC): 18%
Return on Invested Capital (ROIC) (5 Year Median): 18%
Return on Invested Capital (ROIC) (10 Year Median): 16%

Valuation Score (22/34 points)

Free Cash Flow Yield (ttm): 6.6%  (7/9 points)
EV to EBIT (ttm):  12.1 (6/9 points)
EV to EBITDA (ttm):  10.7  (5/9 points)
PE10:   24.2  (4/7 points)
Price to Sales Ratio (ttm): 0.9
Price to Book Value (ttm): 3.9
Price to Earnings Ratio (P/E) (ttm): 18.9

TOTAL POINTS – (72/100) (50 is an average score)

*Compound Annual Growth Rate (CAGR)
**A Compound Annual Growth Rate of 4.14% = a 50% gain over 10 years.

Type of Investor / Recommendation

Large Diversified Dividend Portfolios / Should Be Considered
Looking For Exposure to Consumer Cyclical Sector / Should Be Considered
Deep Value Investors / Can Be Considered On Price Dips

Genuine Parts is ranked #17 (out of 247) overall  and # 5 (out of 31) in Consumer Cyclical sector by the Dividend Analyzer.

GPC is the highest ranking Dividend King and should be considered for any dividend portfolio with high quality stocks.

Portfolio Position Disclosures:
DVB Dividend Kings & Aristocrats – Long
DVB Dividend Growth – None
DVB High Income – None
Arbor Asset Allocation Model Portfolio (AAAMP) – None

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.