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Auto and industrial parts retailer Genuine Parts (NYSE:GPC) missed analysts' expectations in Q2 CY2024, with revenue flat year on year at $5.96 billion. Its non-GAAP profit of $2.44 per share was flat year on year.
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Genuine Parts (GPC) Q2 CY2024 Highlights:
- Revenue: $5.96 billion vs analyst estimates of $6.04 billion (1.2% miss)
- EPS (non-GAAP): $2.44 vs analyst expectations of $2.59 (5.7% miss)
- Gross Margin (GAAP): 36.6%, up from 36.1% in the same quarter last year
- Free Cash Flow of $150.1 million, similar to the same quarter last year
- Locations: 10,700 at quarter end, up from 10,000 in the same quarter last year
- Same-Store Sales were flat year on year (4.9% in the same quarter last year)
- Market Capitalization: $19.27 billion
Largely targeting the professional customer, Genuine Parts (NYSE:GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Auto Parts RetailerCars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.
Sales GrowthGenuine Parts is one of the larger companies in the consumer retail industry and benefits from economies of scale, enabling it to gain more leverage on fixed costs and offer consumers lower prices.
As you can see below, the company's annualized revenue growth rate of 5.1% over the last five years was sluggish , but to its credit, it opened new stores and grew sales at existing, established stores.
This quarter, Genuine Parts's revenue grew 0.8% year on year to $5.96 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 5% over the next 12 months, an acceleration from this quarter.
Same-Store SalesSame-store sales growth is a key performance indicator used to measure organic growth and demand for retailers.
Genuine Parts's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 4.4% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, Genuine Parts is reaching more customers and growing sales.
In the latest quarter, Genuine Parts's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 4.9% year-on-year increase it posted 12 months ago. We'll be watching Genuine Parts closely to see if it can reaccelerate growth.
Key Takeaways from Genuine Parts's Q2 Results It was encouraging to see Genuine Parts slightly top analysts' gross margin expectations this quarter. On the other hand, this quarter's revenue and EPS along with its full-year earnings forecast missed Wall Street's estimates. Overall, this was a bad quarter for Genuine Parts. The stock traded down 3.2% to $134 immediately after reporting.
