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Here's Why You Should Add Genuine Parts Company To Your Portfolio

William Bias profile picture
William Bias


  • Genuine Parts Company sells items integral to the functioning of society such as automotive, industrial and office supplies.
  • Genuine Parts Company doesn’t have a great deal of long-term debt.
  • Genuine Parts Company boosted its dividend for 59 consecutive years.

It's important for long-term investors to develop a guide for doing their investment research. Over the years I have developed questions to guide me in my thinking when researching the publicly traded universe. This represents a good starting point before doing more in depth research. Right now, let's talk about Genuine Parts Company (NYSE: NYSE:GPC).

1.) What does the company do?

When you buy shares in a company you effectively become part owner of that company. Therefore, it's important for an investor to understand what a company sells. Genuine Parts Company distributes automotive parts under the famous NAPA logo. It also distributes industrial parts under the Motion Industries name, which is well known in those circles. The company also distributes office and electrical supplies.

2.) What do the fundamentals look like?

Investors should look for companies that grow revenue and free cash flow over the long-term, retaining some of that cash for reinvestment back into the business and for economic hard times. Excellent revenue and free cash flow growth serve as catalysts for superior long-term gains. Genuine Parts Company is a slow grower, expanding its revenue, net income and free cash flow 42%, 56% and 36%, respectively, over the past five years (see chart below). The company benefited from an expanding economy. Fundamental expansion came from acquisitions as well as organic growth. I prefer to see organic growth as it serves as indication of increasing demand for the products.

GPC Revenue (<a href=

GPC Revenue (NYSE:TTM) data by YCharts

Genuine Parts Company is doing ok so far in FY 2015. Its revenue, net income and free cash flow expanded 2%, 0.3% and 27%, respectively. Once again, acquisitions and organic growth contributed to the expansion in fundamentals.

Genuine Parts Company possesses a decent balance sheet. In the most recent quarter, the company possessed roughly $224 million in cash

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: I am/we are long GPC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (9)

Number7 profile picture
GPC intrigues me... It trades at a discount in terms of P/E, P/S, etc to the majority of the space (automotive aftermarket I mean). Even the half of their business that is in automotive aftermarket is nearly the size of AZO, yet AZO has nearly double the market cap.

However, the NAPA autoparts segment of GPC business operates at roughly half of the operating income margin that AZO attains.

Given that, I wonder what management can be doing to expand the margins of the automotive aftermarket segment of GPC business, or if it should be spun off and re-focused to unlock value?
Rainmaker986 profile picture
I think you are absolutely correct. I have a large position in GPC and have for years. They are in every little town in the southeast and big cities too. I even found one (a counter really in a general store) in Powder River, Wy. Over the years I have seen where their parts (auto, marine & farm) are superior to OEM. I can get parts there I can't get as easily from other auto supply stores.

Their large footprint, variety, value & quality of parts, plus solid business model make them a fine long-term investment. Great article...thanks.
William Bias profile picture
I appreciate to the readership Rainmaker986.

William Bias profile picture
I meant to say I appreciate your readership.

Any insights as to why the stock has dropped considerably in the last 8 months from a high of around $105?
William Bias profile picture
I ranman1973,

I think its due to the general correction in the stock market and softness in its industrial segment and automotive segments.


William Bias profile picture
Believe it or not William Bias is my real name.

Thanks for reading.

mpmassey profile picture
You sound Biased.
Choosh profile picture
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