Genuine Parts (GPC) Stock Analysis

Genuine Parts Dividend

Genuine Parts (GPC) has paid a dividend every year since 1948 and increased it for 68 consecutive years; qualifying the company as a Dividend King, Dividend Aristocrat, and Dividend Champion.

Long term relationships with professional automotive parts clients provide a small moat. GPC is able to provide outstanding value due to fast part availability, convenience of ordering and delivery, and a trusted brand.

Current Dividend Annualized: $4.00

Genuine Parts (GPC) Intrinsic Value – Margin of Safety Analysis            

(updated December 2024)

Normalized Diluted Earnings Per Share (TTM): $7.76
Free Cash Flow Per Share (TTM): $6.44
Cash Flow From Operations Per Share (TTM): $10.36

Estimated Intrinsic Value: $118

Target Buy Price Based on Required Margin of Safety =  $84
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $135
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: C

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade:  C

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade: B

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 9/30/24

AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None 
Global High Income (GHI) – None

Company Description

Sector: Consumer Cyclical
Industry: Specialty Retail

Company Overview:
Genuine Parts Company (GPC) is a leading global distributor of automotive and industrial replacement parts. Best known for its ownership of NAPA Auto Parts, the company supplies repair shops, retailers, and service centers with a wide range of aftermarket auto parts. It also operates an industrial segment through Motion Industries, providing components and services for manufacturing and maintenance.

Company Strengths:
GPC benefits from a strong distribution network, a well-established brand in NAPA, and consistent demand for replacement parts, which are less sensitive to economic downturns. Its industrial segment adds diversification, while strategic acquisitions have helped expand its market presence. The company’s history of reliable dividend payments and steady revenue growth makes it attractive to long-term investors.

Company Challenges:
GPC faces challenges from rising competition in the auto parts industry, including from online retailers and direct-to-consumer manufacturers. Supply chain disruptions and fluctuating raw material costs can impact margins, while the increasing shift to electric vehicles (EVs), which have fewer moving parts than traditional cars, could reduce long-term demand for some of its products. Additionally, integrating acquisitions effectively while maintaining operational efficiency remains a key priority.

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.