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Genuine Parts (GPC) to Report Q2 Earnings: What’s in Store?


Genuine Parts GPC will release its second-quarter fiscal 2017 results on Jul 20, before the market opens.

Genuine Parts reported adjusted earnings of $1.08 per share in first-quarter fiscal 2017, beating the Zacks Consensus Estimate by 2.86%. Revenues in the reported quarter increased 5% year over year to $3.91 billion, surpassing the Zacks Consensus Estimate of $3.87 billion.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Genuine Parts has undertaken various initiatives to boost sales and earnings, such as product-line expansion, penetration into new markets and cost-saving activities. The company relies on a diverse product portfolio for top- and bottom-line growth.

Earnings per share in 2017 are expected in the band of $4.70–$4.80, up from the $4.59 recorded in 2016. Annual revenues of Genuine Parts are expected to increase in the range of 3–4%, while comparable sales growth is projected to increase 2% to 3%. Revenues from Automotive and Industrial are estimated to increase in the range of 3–4%, Office segment is expected to witness 2–3% improvement, and the Electrical segment is likely to grow 1% to 2%.

However, high level of inventory is a challenge for the company. The high proportion of inventory in current assets can affect short-term liquidity of the company in periods of low sales.

Earnings Whispers

Our proven model does not conclusively show that Genuine Parts is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, this is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Genuine Parts is currently 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.31. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Genuine Parts currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

Concurrently, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few stocks in the Auto industry you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

PACCAR Inc. PCAR has an earnings ESP of +2.04% and carries a Zacks Rank #2. The company’s second-quarter 2017 financial results will release on Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.

Horizon Global Corporation HZN has an earnings ESP of +2.99% and carries a Zacks Rank #2. The company’s second-quarter 2017 financial results are expected to release on Aug 14.

Tenneco Inc. TEN has an earnings ESP of +3.87% and carries a Zacks Rank #3. The company will release its second-quarter 2017 financial results on Jul 28.

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