Today's stock of Genuine Parts experienced a 3% decrease.
Genuine Parts' (GPC) shares took a tumble, dipping 3.3% by 11 a.m. ET, despite surpassing analyst projections in sales and earnings for the fourth quarter of 2024. Wall Street had anticipated earnings of $1.55 per share, adjusted for one-time expenses, on sales of $5.7 billion. However, the auto and industrial parts supplier managed to earn $1.61 per share, with sales approaching $5.8 billion.
Q4 Earnings Breakdown
Though sales outperformed forecasts, they only saw a 3.3% increase year-over-year. Worse still, an inventory write-off decreased gross profit margins by 50 basis points, ending at 35.9%. And while the adjusted EPS stood at $1.61, GAAP earnings were significantly lower at $0.96 per share, marking a drastic decline from the year prior.
Management attributed these results to "expenses derived from the company's global restructuring initiative, the integration of independent stores, and the aforementioned inventory write-down."
For the full year, sales grew by a modest 1.7% to reach $23.5 billion, with earnings dropping by 31% to $6.47 per share.
Genuine Parts' Forecast: Dark Clouds Ahead
Projecting sales growth of just 2-4% for the coming year and an adjusted EPS range of $7.75 to $8.25, results fall short of analysts' forecast earnings of $8.29. GAAP profits are expected to be even lower still, coming in at $6.95 to $7.45 per share.
There's one more caveat: Management anticipates taking a substantial charge to earnings upon the settlement of its U.S. pension plan, tentatively scheduled for late 2025 or early 2026. Though this charge won't impact 2025 earnings forecasts, it could have a significant impact on diluted EPS when it eventually comes to pass.
In plain English, Genuine Parts is offering a serious earnings warning. It's crucial to pay heed to these red flags.
Enrichment Data Insights
- The company's earnings per share (EPS) fell short of expectations, missing the forecasted $1.64 by 1.83%.
- Sales grew, but only by 3.3%, partly due to acquisitions and favorable foreign currency impact.
- The company was impacted by infrastructure, technology, and vendor services expenses associated with the restructuring initiative and acquisition integration.
- The industrial and automotive markets presented significant challenges, impacting earnings.
- Planned investments in the business will lead to increased depreciation and interest expenses, weakening EPS.
- In 2025, the company projects a diluted EPS range of $6.95 to $7.45, with total sales growth of 2-4%. Earnings are expected to decline by 15-20% in the first half, before rebounding in the second half.
[1] Investor Presentation, Genuine Parts Company, February 18, 2025[2] Financial Results Q4 2024, Genuine Parts Company, February 18, 2025[3] Letter to Shareholders and Stakeholders, Genuine Parts Company[4] Earnings Release, Genuine Parts Company, February 18, 2025[5] Transcript of Genuine Parts Q4 Earnings Call, February 18, 2025
- Despite surpassing analyst predictions in earnings and sales for Q4 2024, GPC's shares saw a decrease of 3.3% due to probable concerns about the company's future finance prospects.
- As a result of the inventory write-off and expenses from global restructuring and store acquisitions, GPC's earnings per share (EPS) shrank significantly in Q4 2024, contributing to a decrease in overall profits.
- In the coming year, GPC expects very modest sales growth and a reduction in adjusted EPS, which is likely to further shrank the company's financial earnings, as indicated by their forecasts.
- To make matters worse, GPC anticipates taking a substantial charge to earnings upon settling its U.S. pension plan in 2025, which could potentially lead to an even further decrease in EPS during that time.
