Updated 3/10/25
Genuine Parts Company (NYSE: GPC) has built a solid reputation in the automotive and industrial parts distribution business. Best known for its NAPA Auto Parts brand, the company operates a vast network that keeps vehicles and machinery running smoothly.
For dividend investors, GPC is a standout. With a history of paying and increasing dividends for over 50 years, it has earned its place among the Dividend Kings—an exclusive club of companies with unmatched consistency in rewarding shareholders.
With that in mind, let’s dive into the numbers and see what makes GPC a strong income play while also considering the risks that come with it.
Key Dividend Metrics
📌 Dividend Yield: 3.24%
📌 Annual Dividend: $4.12 per share
📌 Payout Ratio: 61.82%
📌 5-Year Average Dividend Yield: 2.75%
📌 Dividend Growth Streak: Over 50 years
📌 Recent Dividend Increase: 3.0% in 2024
📌 Ex-Dividend Date: March 7, 2025
📌 Next Dividend Payment Date: April 2, 2025
Dividend Overview
GPC’s dividend yield of 3.24% is attractive, especially for investors looking for steady income. Historically, its yield has been lower, averaging around 2.75% over the past five years. This means that, based on past trends, the stock might be trading at a slight discount compared to its usual valuation.
The company’s annual dividend payout of $4.12 per share is well-covered, with a payout ratio of just over 60%. While not ultra-conservative, this level leaves room for future growth while ensuring that earnings support the dividend.
Dividend Growth and Safety
One of GPC’s greatest strengths is its long track record of raising dividends. With more than five decades of consecutive increases, the company has been through all types of economic cycles and still managed to reward investors year after year.
The most recent dividend hike of 3% in 2024 is consistent with past increases, though slightly lower than some of the company’s historical raises. This suggests a cautious approach, which makes sense given that earnings have taken a hit recently.
Looking at safety, GPC’s dividend remains in solid territory. The company generated $1.25 billion in operating cash flow over the past year, which more than covers dividend payments. However, one red flag is the debt load. With a debt-to-equity ratio nearing 140%, the company is carrying more leverage than some dividend investors might be comfortable with.
Chart Analysis
Price Action and Trend
The stock has been in a clear downtrend over the past year, with lower highs and lower lows forming a bearish structure. The 200-day moving average has been sloping downward, reinforcing the overall negative sentiment. The 50-day moving average crossed below the 200-day moving average several months ago, signaling a bearish trend that has persisted.
Recently, however, there has been a noticeable shift. The stock has bounced off its lows and is now attempting to regain some ground. The price has moved above the 50-day moving average, which could indicate a short-term trend reversal. It is approaching the 200-day moving average, which will act as a key resistance level.
Volume and Market Participation
Trading volume has been relatively stable but with a few noticeable spikes. A large volume surge occurred in October, coinciding with a sharp drop in price. This suggests a period of capitulation where weak hands may have exited the stock.
More recently, volume has picked up slightly during the latest price recovery. This is an encouraging sign, as it indicates buyers are stepping in at these levels. However, the volume levels are not yet strong enough to confirm a sustained breakout.
Relative Strength Index (RSI)
The RSI has been moving higher after spending some time in oversold territory. This suggests that momentum is shifting in favor of the bulls. The RSI is now approaching the 60 level, which means there is still room for the stock to move higher before becoming overbought.
If the RSI pushes above 70, it could indicate an overextended rally that may need a pullback. On the other hand, if the RSI starts to roll over before reaching that level, it could suggest fading momentum and a potential rejection at resistance.
Key Resistance and Support Levels
The most immediate resistance is around the 200-day moving average, which has been a clear ceiling for the stock in previous attempts. If the stock can break through this level with strong volume, it could confirm a more significant trend shift.
On the downside, support is near the recent consolidation range around 120. If the stock fails to hold above that level, it could retest the previous lows. This would indicate that the downtrend is still intact.
Moving Averages and Trend Confirmation
The 50-day moving average has started to turn slightly upward, which is an early sign that the short-term trend may be improving. However, for a true confirmation of trend change, the price would need to reclaim the 200-day moving average and hold above it.
Until that happens, the stock remains in a recovery phase rather than a confirmed uptrend. The interaction between the stock price and these key moving averages in the coming weeks will provide further clues about the direction ahead.
Analyst Ratings
📈 Recent Upgrades
Several analysts have recently adjusted their outlook on Genuine Parts Company (GPC). 🔼 Truist Financial raised its price target from 129 to 133 and issued a “buy” rating on February 19, 2025. This upgrade reflects optimism about GPC’s ability to navigate current market conditions and deliver consistent financial performance. Similarly, Loop Capital initiated coverage with a “buy” rating and a 155 price target on January 16, 2025, indicating confidence in the company’s growth prospects.
📉 Recent Downgrades
On the other hand, some analysts have adopted a more cautious stance. 🔽 Evercore ISI lowered its price target from 128 to 125, maintaining an “in-line” rating on February 19, 2025, suggesting concerns over potential headwinds affecting GPC’s performance. Additionally, Northcoast Research downgraded the stock from “buy” to “neutral” on January 17, 2025, indicating a more reserved outlook on the company’s near-term prospects.
📊 Consensus Price Target
As of the latest data, the consensus 12-month price target among analysts for GPC stands at approximately 137.63. 🎯 This average is derived from multiple forecasts, with individual targets ranging from a low of 120 to a high of 170. The consensus suggests an anticipated upside of about 8.02 percent from the current stock price of 127.41.
💡 Factors Influencing Ratings
The mixed analyst opinions on GPC stem from various factors. ✅ Positive sentiments are often based on the company’s strong market position, consistent dividend payouts, and resilience in the automotive and industrial parts sectors. Analysts issuing upgrades may believe that GPC’s strategic initiatives and operational efficiencies will drive future growth.
❗ On the other hand, downgrades reflect concerns over challenges such as increased leverage and potential macroeconomic headwinds. For example, S&P Global Ratings recently revised GPC’s outlook to negative due to elevated acquisition activity and soft operating performance in 2024, which led to higher leverage ratios. These factors contribute to a more cautious perspective among some analysts.
Overall, the analyst community presents a balanced view of GPC, with recommendations ranging from buy to hold, reflecting both the company’s strengths and the challenges it faces in the current economic environment.
Earnings Report Summary
Genuine Parts Company (GPC) just released its latest earnings update, giving investors a look at how things played out in the fourth quarter and throughout 2024. While sales showed some growth, earnings took a hit, reflecting the challenges the company has been navigating.
Fourth Quarter Performance
GPC pulled in $5.77 billion in revenue for the fourth quarter, which was slightly higher than the $5.71 billion from the same time last year. However, profits told a different story. Net income came in at $133 million, or $0.96 per share, which is quite a drop from the $317 million, or $2.26 per share, reported in the fourth quarter of 2023. The decline suggests the company faced higher costs or tighter margins, despite keeping sales steady.
Full-Year 2024 Highlights
Looking at the full year, revenue reached $23.49 billion, marking a 3.3 percent increase over 2023. Growth is always good to see, but profits didn’t follow the same trajectory. GPC’s net income for 2024 was $904 million, or $6.47 per share, down from $1.11 billion, or $7.79 per share, the previous year. That’s a notable drop, and it raises questions about what’s weighing on the company’s bottom line.
A Closer Look at the Business Segments
- Automotive Parts Group: Sales in this segment grew by 4.8 percent, bringing in $3.8 billion in the fourth quarter. The increase was driven by acquisitions and a small boost in comparable sales. The downside? Profit margins slipped from 8.9 percent to 6.9 percent, which could be due to higher costs or pricing pressures in the industry.
- Industrial Parts Group: This segment had a rougher quarter, with sales dipping 1.2 percent to $2.2 billion. Demand in certain markets, especially in Europe, was weaker than expected. Margins also fell from 12.9 percent to 11.9 percent, which means the segment isn’t generating as much profit on each sale as it did before.
Updated Forecast for 2024
Given the recent results, GPC adjusted its outlook for the rest of the year. The company now expects sales growth of 1 to 2 percent, slightly lower than its previous forecast of 1 to 3 percent. Earnings expectations have also been revised down, with projections now between $8.00 and $8.20 per share, compared to the earlier range of $9.30 to $9.50.
What the Leadership Team is Saying
CEO Will Stengel acknowledged the challenges GPC faced, particularly in the industrial segment and European markets. Despite the setbacks, he emphasized that the company is continuing to invest in key areas and improve operations to drive future growth.
Cash Flow and Financial Position
On the cash flow front, GPC generated $1.25 billion in operating cash flow in 2024. The company spent $386 million on capital expenditures and $954 million on acquisitions. Shareholders were rewarded with $411 million in dividends, and GPC also repurchased $112 million worth of stock.
By the end of 2024, the company had $2.6 billion in total liquidity, including $1.1 billion in cash and $1.5 billion in available credit.
Overall, GPC’s revenue continues to grow, but the company is facing pressure on profitability. Investors will be keeping a close eye on how management handles these challenges and whether margins can improve in the coming quarters.
Financial Health and Stability
GPC operates in a stable and necessary industry, but the numbers show that earnings have taken a hit. The company’s revenue stands at $23.49 billion, with a modest 3.3% year-over-year growth rate. However, quarterly earnings have dropped by 58%, which is a significant decline.
Profitability metrics remain solid despite this setback. The return on equity (ROE) is a strong 20.62%, indicating that management is effectively using shareholder capital. However, return on assets (ROA) sits at just 5.18%, which suggests that the business is more asset-heavy and not as efficient as some other dividend stocks.
On the balance sheet side, total debt is $6.09 billion, which is something to watch. The company has a current ratio of 1.16, meaning it has slightly more short-term assets than liabilities. This isn’t concerning in the short term, but long-term debt management will be crucial in maintaining financial flexibility.
Valuation and Stock Performance
GPC is currently trading at a forward price-to-earnings (P/E) ratio of 16.16, which is within a reasonable range. This suggests that investors are neither overpaying nor getting a deep bargain.
The stock has underperformed over the past year, dropping 16.58% while the S&P 500 has climbed 12.74%. This could mean that the stock is undervalued at current levels, especially as it is closer to its 52-week low of $112.74 rather than its high of $164.45.
Other valuation indicators:
✅ Price-to-Sales: 0.76, which is relatively low for its sector
✅ Price-to-Book: 4.07, indicating a fair valuation compared to assets
✅ EV/EBITDA: 13.63, slightly elevated but not extreme
With the stock trading near its lower price range, some investors might see this as a potential buying opportunity.
Risks and Considerations
While GPC’s dividend history is impressive, there are risks that investors should be mindful of.
📉 Earnings Decline: The 58% year-over-year drop in earnings is a red flag. If this trend continues, it could impact future dividend growth.
📦 Supply Chain Uncertainty: GPC operates in a distribution-heavy industry, meaning any supply chain disruptions could affect its ability to generate consistent revenue.
💰 Debt Load: The company’s leverage is on the higher side, which could become a concern if interest rates remain elevated for an extended period.
📊 Valuation vs. Growth: While the stock is not expensive, the PEG ratio of 2.70 suggests that the company isn’t growing as fast as some investors might like.
⚠️ Cyclicality: GPC is tied to the broader economy, and if there’s a slowdown, demand for auto and industrial parts could decline, putting pressure on profitability.
Final Thoughts
Genuine Parts Company has long been a dependable income stock, and it continues to be one of the most reliable dividend payers in the market. Its business model is stable, and its history of consistent payouts makes it an attractive choice for income investors.
That said, recent earnings declines and a high debt load are factors to watch. While the dividend appears safe for now, future increases may be more modest unless profitability improves.
For those seeking steady income with a history of reliability, GPC remains a strong candidate. As always, keeping an eye on financial health and market conditions will be key to understanding its long-term potential.
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