Tuesday, November 01, 2011

Genuine Parts (GPC) 2011 Review

Genuine Parts (GPC) distributes automotive replacement parts, industrial replacement parts, business products and electrical and electronic components in North America.

The company has grown profits and dividends at a 4% annual rate over the last 10 years, earning a 15%+ return on equity. The 2008/2009 economic softness was a problem for GPC as it was for most auto related companies; however, the company has resumed both its dividend and earnings growth rate as a result of:

(1) product line expansion,

(2) penetration of new markets,

(3) aggressive cost cutting,

(4) improving growth in the auto parts segment as the average age of vehicles on the road has risen to almost 10 years.


(1) consumer uncertainty dampens demand,

(2) GPC lack pricing power in current environment

Genuine Parts is rated A+ by Value Line, has a 8% debt to equity ratio and its stock yields 3.4%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2001
GPC 3.4% 19% 51% 10
IND 2.0 14 20 NA

Debt/Equity ROE EPS Down Since 2001 Net Margin Value Line Rating
GPC 8% 19% 3 4% A+
IND 40 14 NA 4 NA


Note: GPC stock made great progress off its March 2009 low, quickly surpassing the down trend off its September 2007 high (red line) and the November 2008 trading high (green line). Long term, GPC is in an up trend; the straight blue line is the lower boundary. Intermediate term, it is also in an up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolios owns a full position in GPC while the High Yield Portfolio owns a 90% position. Shares would be Added at $44; the lower boundary of its Sell Half Range is $76.