Genuine Parts Company (NYSE: GPC) He has had his share of ups and downs, but he has also proven the value of the Dividend Kings. Dividend Kings And their 50+ year distribution history has proven the ability to operate in all markets, the willingness to change with the times and the foresight to manage the business to generate long-term returns for shareholders.
In the case of Genuine Parts Company, a multi-year transformation from an auto-parts manufacturer to a global auto and industrial parts manufacturer sustained the business and high single-digit growth and powered an attractive dividend. Notable takeaways from the Q1 results are that margins have improved, earnings were better than expected, growth is in line with forecasts and dividends are safe.
The Genuine Parts Company raves more on the solid outlook
Genuine parts were with the company A strong quarter Driven by results in both segments and most operating regions. The company reported record revenue of $5.8 billion, up 8.9% from last year and beating the Marketbeat.com consensus by 200 basis points. The strength was driven by the new industrial segment, which grew by 11.9%, while the legacy automotive segment grew by 7%.
Margin news is also good. The company suffered a margin loss in the automotive group, but a 60 basis point decline was offset by an improvement of 230 bps in the industrial segment. This led to a 24% increase in net income, an adjusted 15%, and earnings 430 basis points better than expected. Turning to guidance, the outlook is equally strong.
The company reaffirmed its expectation for revenue growth in the range of 4% to 6% but raised guidance for earnings. The company expects earnings to top previous highs and approach $1.35 billion for cash-from-ops.
“We are pleased with the solid start to 2023 and continue to expect another strong year of profitable growth. Our updated outlook for the full year reflects our confidence in our strategic plans and ability to execute through continued economic uncertainty. We believe GPC will perform well.” does. is positioned with the financial strength and flexibility to support our growth plans and deliver disciplined capital allocation and enhanced shareholder value,” concluded Mr. Donahue.
Genuine Parts Company, you pay a premium but get a deal
GPC stock’s valuation is a bit high at 18X earnings, but it’s not astronomical, and you get a lot for the money. The company’s cash flow is sufficient to cover the 2.28% dividend yield while buying back shares, servicing debt and investing in the business. The payout ratio is as low as 43%, which increases the distribution number and suggests that this company could be a double king. The distribution growth rate isn’t high, but even a 6% CAGR is better than what most dividend kings are running.
There are analysts holds stock But see it trading slightly lower than now at $168. The caveat is that the most recent report came out just a few weeks before publication and Upgraded the stock to buy. That rating is from Truist, which sees the market trading at $186, or about 10% above post-release price action. If that sentiment resonates now that the report is out; This stock may complete its reversal. However, the market faces resistance at the $170 level. In this scenario, the stock may trend sideways at current levels till the end of the year. If the market can move above $170, it can rise to $180.
