Auto and industrial parts retailer Genuine Parts (NYSE:GPC) reported Q4 CY2024 results topping the market’s revenue expectations, with sales up 3.3% year on year to $5.77 billion. Its non-GAAP profit of $1.61 per share was 3.5% above analysts’ consensus estimates.
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Genuine Parts (GPC) Q4 CY2024 Highlights:
- Revenue: $5.77 billion vs analyst estimates of $5.71 billion (3.3% year-on-year growth, 1% beat)
- Adjusted EPS: $1.61 vs analyst estimates of $1.55 (3.5% beat)
- Adjusted EBITDA: $556 million vs analyst estimates of $428 million (9.6% margin, 29.9% beat)
- Adjusted EPS guidance for the upcoming financial year 2025 is $8 at the midpoint, missing analyst estimates by 5.6%
- Operating Margin: 6.4%, down from 7.5% in the same quarter last year
- Free Cash Flow was -$26.72 million, down from $190.3 million in the same quarter last year
- Same-Store Sales were flat year on year, in line with the same quarter last year
- Market Capitalization: $17 billion
"I would like to thank our global GPC teammates for their hard work and dedication to serving our customers throughout 2024," said Will Stengel, President and Chief Executive Officer.
Company Overview
Largely targeting the professional customer, Genuine Parts (NYSE:GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Auto Parts Retailer
Cars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years.
With $23.49 billion in revenue over the past 12 months, Genuine Parts is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences consumer purchasing decisions. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth.
As you can see below, Genuine Parts grew its sales at a tepid 6% compounded annual growth rate over the last five years (we compare to 2019 to normalize for COVID-19 impacts) as it barely increased sales at existing, established locations.
This quarter, Genuine Parts reported modest year-on-year revenue growth of 3.3% but beat Wall Street’s estimates by 1%.
Looking ahead, sell-side analysts expect revenue to grow 3.1% over the next 12 months, a slight deceleration versus the last five years. We still think its growth trajectory is satisfactory given its scale and suggests the market sees success for its products.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Over the last two years, Genuine Parts opened new stores at a rapid clip by averaging 4% annual growth, among the fastest in the consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Note that Genuine Parts reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Genuine Parts’s demand within its existing locations has been relatively stable over the last two years but was below most retailers. On average, the company’s same-store sales have grown by 1.2% per year. This performance suggests it should consider improving its foot traffic and efficiency before expanding its store base.
In the latest quarter, Genuine Parts’s year on year same-store sales were flat. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if Genuine Parts can reaccelerate growth.
Key Takeaways from Genuine Parts’s Q4 Results
We were impressed that Genuine Parts beat analysts’ revenue and EBITDA expectations this quarter. On the other hand, its full-year EPS guidance missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $125.97 immediately following the results.
So should you invest in Genuine Parts right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
