Genuine Parts (GPC) Stock Analysis
Genuine Parts Dividend
Current Dividend: $2.70
Dividend Yield: 2.9%
Cash Dividend Payout Ratio: 57%
Market Capitalization: 14 B
Enterprise Value: 14 B
Sector: Consumer Cyclical
Industry: Specialty Retail
Genuine Parts (GPC) has a distribution network of over 2650 operations far and near, including the United States, Canada, Mexico, the Caribbean, Australia, New Zealand, China, and global emerging markets. The company describes itself as “a service organization” divided into 4 groups:
Automotive Replacement Parts: NAPA Auto Part
(52% of GPC revenues. 6,000+ stores that distribute approximately 450,000 automotive replacement parts, accessory and service items.)
Industrial Replacement Parts: Motion Industries
(30% of GPC revenues, over 6.5 million parts and related supplies including bearings, mechanical power transmission products, industrial and safety supplies, etc.)
Office Products: S.P. Richards
(13% of GPC revenues, over 62,000 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:
(5% of GPC revenues, over 100,000 items including wire and cable, insulating and conductive materials, assembly tools, and test equipment.)
Genuine Parts is a trusted brand with a large scale distribution system and convenient retail locations. Their reputation for parts availability and fast delivery sets NAPA apart from smaller competitors.
Superior levels of component availability give a huge advantage to GPC. To replicate what the company has built over the decades would require an investment that keeps competitors away (moat).
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.
Genuine Parts continues to expand into new markets. A high average vehicle age, increased driving per car, and other economic trends favor GPC.
Competition (including independent stores) 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): 7.0%
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
Gross Profit (ttm): $4564
Total Assets: $8749
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.
Latest Earnings Report: 10/19/2016
Estimated Next Earnings Report: 2/16/2017
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(updated November 2016)
Type of Investor / Recommendation
Large Diversified Dividend Portfolios / Excellent Option
Looking for Exposure to Kings & Aristocrats / Excellent Option
Looking For Exposure to Consumer Cyclical Sector / Should Be Considered
Deep Value Investors / Watchlist
General Parts (GPC) is ranked #16 (out of 245) overall and #5 (out of 31) in the Consumer Cyclical Sector by the Dividend Analyzer.
I would consider GPC is a must for large diversified dividend portfolios and portfolios concentrating on high quality stocks. Deep value investors can consider adding this quality stock at lower prices.
Portfolio Position Disclosures:
DVB Foundation Portfolio: None
DVB Dividend Growth: None
DVB High Income: None
Arbor Asset Allocation Model Portfolio (AAAMP): None
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