Genuine Parts: Quality Consumer Cyclical Company With 2% Yield (NYSE:GPC)

Genuine Parts Information

Genuine Parts Company (NYSE:GPC) is a consumer cyclical special retail auto and machinery replacement parts supplier. It operates internationally, has a $24.9 billion market cap and long term debt of 52.4% with currently no S&P credit rating. It was incorporated in 1928 and is headquartered in Atlanta, GA.

It is a dividend aristocrat and champion for paying a rising dividend, without fail, for an amazing 66 years and counting.

Dividend

In the chart below, the following abbreviations are used:

Div = dividend

Yrs = years

Div Yld = Dividend yield obtained by using information in the chart

5yr DGR = 5 year dividend growth rate

	Company	div	Type/	2022		5yr
Ticker	Name	yrs	Sector	Div	Div Yld	DGR
GPC	Genuine Parts	66	Cons-Discr	$3.58	2.0%	4.40%

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The dividend for 2022 is $3.58 which at the current price of $177 = 2.0% yield. It normally pays on a 1-4-7-10 quarterly schedule, with the dividend change occurring usually with the April payment. The 5-year dividend growth rate is 4.4%, with the last 2 years lower and ~3.4%. You will see in the FASTgraph “FG” shown below, the dividend estimate for 2023 is $3.85 which would be a 7.5% raise. The dividend payout is ~47.2%.

There is no S&P credit rating, which generally means it has not had the need to borrow cash.

Analyst Pricing

The following abbreviations are used in the chart that follows:

Curr Pr/Sh = Current price per share

M* FV = Morningstar fair value

M* Buy = Morningstar lowest and very inexpensive price to buy

VL = Value Line safety score: 1 is the safest or best and 5 would be very unsafe

VL Mid PT = Value Line 18 month future price target or Mid 2024.

YF PT = Yahoo Finance 1 year future price target

CFRA = TD Ameritrade analyst price target

52 wk Low = current 52-week price low

52 wk High = current 52-week price high

Stock	Curr	M*	M*		VL	YF		52 wk	52 wk
Ticker	Pr/Sh	FV	Buy	VL	Mid Pt	PT	CFRA	Low	High
GPC	177.07	$141	$98.7	3	$174	$166.44	$160	$115.63	$187.73

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Value Line Midpoint for 2024 seems to be the closest to where GPC is priced today, so it is indeed doing outstandingly well.

Below is a Yahoo Finance YTD chart showing how the price has advanced thus far this year.

So many stocks are down, and having such an upward performance in this difficult environment means they must be providing great earnings. The FG shown next will reveal it all.

FAST Graph

FG shows in one picture graph statistics and numbers that help visualize earnings, price, dividend attractiveness and much more. The FAST part of FG, just in case you were wondering, means, Fundamental Analyzer Software Tool, which was developed and introduced by Chuck Carnevale, a writer at SA. I have a grandfathered subscription for it and enjoy using it.

The following colors/lines on the chart represent the following:

Black line = price

White line = dividend

Orange line = Graham average of usually 15 P/E “price/earnings” for most stocks.

Blue line = Normal P/E

Dashed or dotted lines are estimates only.

Green area represents earnings.

Statistics by year are noted for high and low prices at the top of each chart in black, and for earnings and dividends at the bottom of it. The % shown is for the change from year to year for earnings.

Shown below is a 7-year chart representing the last 5 years along with 2 years of future estimates (dotted lines).

P/E = Price/Earnings

The here and now blended P/E shown in the above FG is 21.79x and the normal blue line P/E is lower at 19.34x. Those figures suggest the price is above normal and why most analysts have lower current fair values as previously shown.

2023 and 2024 estimated growth is to rise up 6% for both years to $8.60 and then $9.13. Those actually are great in a possible recession, but not what this stock has done over the last few years and as reflected in the current price. That information might just bring the price down to normal and maybe nearer to the orange 15 P/E line. Note the estimated 10% earnings growth shown in the green box is higher and an average. All would indicate it should sell for a lower future price, which would make me agree with CFRA suggestion to hold and get more if the price falls.

The suggested prices for earnings using the normal P/E of 19.34 x $8.60 = $166.32 for 2023. 2024 with suggested $9.13 earnings = $176.57 which is right where it is today for price. However, if the recession happens and a 15 P/E is used the price goes lower to $129 – $137.

Genuine Parts is quality and priced today perfectly for 2024. To me, it would seem it has peaked for price.

Summary/Conclusion

Genuine Parts has been a part of Rose’s Income Garden “RIG” portfolio for many years and will remain a core holding. I believe it has also been a part of “RIG” success. Below are the latest results for FMP “Funds Macro Portfolio” found at The Macro Trading Factory and for RIG.

Please see the marketing bullet point for more information and the sale ongoing to join the service that runs until the new year.

Happy Investing to all!