On Dec 28, 2015, Zacks Investment Research downgraded Genuine Parts Company GPC to a Zacks Rank #4 (Sell).
Why the Downgrade?
Genuine Parts reported earnings of $1.24 per share in third-quarter 2015, which was flat year over year. The bottom line was adversely affected by foreign currency headwinds and challenging global economic conditions. Revenues in the third quarter dropped 2% year over year to $3.92 billion, missing the Zacks Consensus Estimate of $4 billion.
In addition, Genuine Parts lowered its guidance due to negative currency effects. The company now anticipates revenues to remain flat or improve marginally in 2015, down from the previous expectation of 2%–2.5% growth. Genuine Parts expects challenges in the Electrical/Electronic Materials, Industrial Parts segments and Automotive segment for the year. Thus, for 2015, the company anticipates earnings per share in the range of $4.55–$4.60, including 15–16 cents per share negative currency exchange impact, down from the previous estimate of earnings of $4.65–$4.70 per share that included 15 cents negative currency adjustment.
Further, rising competition in the industries where Genuine Parts operates poses a concern. Moreover, unfavorable economic conditions, including low economic growth and high unemployment are a challenge for Genuine Parts.
Stocks to Consider
Better-ranked automobile stocks include General Motors Company GM, Fox Factory Holding Corp FOXF and O'Reilly Automotive Inc. ORLY. All these stocks carry a Zacks Rank #2 (Buy).
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