It hasn't been a great afternoon session for Genuine Parts Company investors, who have watched their shares sink by -2.4% to a price of $134.04. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
A Very Low P/E Ratio but Trades Above Its Graham Number:
Genuine Parts Company distributes automotive replacement parts, and industrial parts and materials. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Genuine Parts Company has a trailing 12 month P/E ratio of 15.1 and a P/B ratio of 4.49.
Genuine Parts Company's PEG ratio is 1.66, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $16,832 | $17,522 | $16,537 | $18,871 | $22,096 | $23,028 |
| Revenue Growth | n/a | 4.1% | -5.62% | 14.11% | 17.09% | 4.22% |
| Gross Margins | 33% | 33% | 34% | 35% | 35% | 36% |
| Operating Margins | 6% | 5% | 2% | 6% | 7% | 7% |
| Net Margins | 5% | 4% | 1% | 5% | 5% | 5% |
| Net Income (MM) | $810 | $621 | $163 | $899 | $1,183 | $1,252 |
| Net Interest Expense (MM) | $102 | $91 | $91 | $100 | $74 | $65 |
| Depreciation & Amort. (MM) | $228 | $257 | $273 | $291 | $348 | $350 |
| Earnings Per Share | $5.5 | $4.24 | -$0.2 | $6.23 | $8.31 | $8.84 |
| EPS Growth | n/a | -22.91% | -104.72% | 3215.0% | 33.39% | 6.38% |
| Diluted Shares (MM) | 147 | 146 | 145 | 144 | 142 | 139 |
| Free Cash Flow (MM) | $919 | $614 | $1,832 | $992 | $1,127 | $1,021 |
| Capital Expenditures (MM) | $227 | $278 | $183 | $266 | $340 | $445 |
| Current Ratio | 1.28 | 1.24 | 1.21 | 1.18 | 1.15 | 1.16 |
| Long Term Debt (MM) | $2,432 | $2,802 | $2,517 | $2,409 | $3,077 | $2,963 |
| Net Debt / EBITDA | 2.3 | 2.82 | 2.59 | 1.14 | 1.39 | 1.32 |
Genuine Parts Company has growing revenues and increasing reinvestment in the business and wider gross margins than its peer group. Additionally, the company's financial statements display positive EPS growth and healthy leverage. Furthermore, Genuine Parts Company has average net margins with a stable trend and irregular cash flows.
