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Genuine Parts (NYSE:GPC) is about a month away from reporting its Q3 earnings, with two weeks left in its quarter. Based my model, the company is set to exceed the consensus earnings forecast of $0.94 by about $0.03. This would be the company's eleventh consecutive quarter of beating earnings expectations and, based on low forecasts for Q4 and next year, it looks like this streak can continue.

Genuine Parts is a conglomerate distributor with about 50% of its revenues and profits coming from its NAPA automotive aftermarket division. This business has been strong lately and regaining lost market share. Consumers remain very cost-conscientious, holding onto their autos longer, which is good for the automotive aftermarket. A stronger Canadian Dollar also provides a little tailwind for sales and profits. I expect the division to deliver sales growth in line with second half (2H) guidance at 6%-8%.

The big swing division for the company is Motion Industries, its industrial distribution arm. This business tracks very closely to the published Industrial Production statistic put out monthly by the Federal Reserve. Its revenues have also historically tracked closely with W.W. Grainger's (NYSE:GWW), which is important as Grainger puts out a monthly sales update that can be looked at as a proxy for Motion Industries' sales trends. Based on stronger than expected Industrial Production output in August and continued strength at Grainger in Q3, I believe Motion Industry sales are on track to grow 13%-15% in Q3. This is above 2H guidance for 8%-10% and should help boost EPS above expectations.

The company's electrical division (EIS) should also get a boost from a recent acquisition of Cobra & Wireless. This will have more of an impact in Q4 when it should add about 8%-9% to division revenues and about 40 bps to total revenue growth. While the company does not comment on the profitability of its acquisitions, past experience suggest this deal should be accretive especially given the low rate of return GPC is earning on its cash currently.

Finally, the company's office supply distribution arm (SP Richards) has been growing again the last few quarters after a couple years of modest sales declines. Back-to-school sales reports suggest off core supplies are doing in line to slightly above expectations (e.g., negative updates have centered on technology, not the core supplies SP Richards distributes). Expectations are for 4%-5% sales growth in Q3 and I believe the division will meet this target.

In total, I think the company is on track to drive over 10% sales in Q3 versus guidance for 6%-9%. Earnings should exceed expectations by about $0.03. While Q4 is obviously more uncertain given market volatility, current trends suggest earnings on track here to exceed expectations here as well. Earnings guidance for the year is therefore likely to rise too, from the current $3.40-$3.50 to perhaps $3.45-$3.55.

Combined with a solid dividend that is currently yielding 3.5% and could see a 10% boost in early 2012, I like the stock here heading into earnings.

Disclosure: I am long GPC.

Source: GPC Earnings Preview: Positive Signs