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On Tuesday, CFRA analyst Garrett Nelson upgraded Genuine Parts Company (NYSE:GPC) stock rating from Hold to Buy, establishing a price target of $130.00. With a current market capitalization of $15.95 billion and a P/E ratio of 17.66x, Nelson’s assessment is based on a projected 2026 price-to-earnings (P/E) ratio of 14.5 times, which is a discount compared to Genuine Parts’ ten-year average forward P/E of 18.2 times. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report. Despite a year-over-year decrease in adjusted earnings per share (EPS) for the first quarter, the company surpassed consensus estimates and reported net sales growth.
Genuine Parts reported adjusted EPS of $1.75 for the first quarter, down 21% from $2.22 in the previous year, but still ahead of the consensus forecast of $1.68. The company’s net sales increased by 1.4% to $5.87 billion, which was $40 million above consensus. The gross margin also expanded by 120 basis points to 37.1%, surpassing consensus by 80 basis points.
The growth in net sales was primarily attributed to a 2.5% increase in the Automotive segment, while the Industrial segment experienced a slight decline of 0.4%. Genuine Parts has reaffirmed its full-year adjusted EPS guidance range of $7.75 to $8.25. This guidance’s midpoint exceeds the current consensus of $7.90, but suggests a modest decrease from the $8.16 earned in 2024.
Nelson highlighted that the company’s outlook does not factor in the potential impact of new U.S. tariffs introduced in the first quarter or any corresponding reciprocal tariffs. The upgrade to a Buy rating reflects a positive view on the Automotive segment, which is expected to benefit from favorable aftermarket trends. Additionally, the analyst praised Genuine Parts’ attractive 3.5% dividend yield and its status as a member of the S&P Dividend Aristocrat Index.
In other recent news, Genuine Parts Company reported its first-quarter 2025 earnings, surpassing analyst expectations with an earnings per share of $1.75 against a forecast of $1.68. The company also exceeded revenue projections, reporting $5.87 billion compared to the expected $5.83 billion. This performance marks a year-over-year sales increase of 1.4%, with gross margins improving by 120 basis points to 37.1%. Genuine Parts Co is undergoing a global restructuring aimed at achieving $200 million in cost savings by 2026. Analyst feedback from firms like Jefferies and Evercore indicated a positive outlook on the company’s strategic initiatives, although the stock was not specifically upgraded or downgraded. The company’s efforts include enhancing operational efficiency and expanding its footprint through acquisitions, with 44 new stores acquired in the quarter. Despite challenges such as tariffs and supply chain disruptions, the company maintains its earnings guidance for 2025, projecting diluted EPS between $6.95 and $7.45.
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