Morningstar

Morningstar, Inc.

Equity Bottom-Up

A large change to our $101 fair value estimate is unlikely after narrow-moat Genuine Parts posted second-quarter results. Although industry conditions in Europe led Alliance Automotive Group to underperform, we see the issues as transitory. While we plan to temper our near-term outlook (the valuation impact of which should be offset by a time value of money-related adjustment), our 10-year forecast still calls for roughly 4% organic annual revenue growth and 7% adjusted operating margins, on…

As a top distributor of automotive and industrial/electrical parts (56% and 34% of 2018 net sales, respectively), Genuine Parts benefits from industry dynamics favoring its scale-enabled service levels. We believe the firm will use its cost advantage to boost sales through its ability to offer a wide variety of parts on short order, building inventory and cost leverage as sales rise while fortifying brand value in a way subscale peers cannot economically replicate.Aftermarket auto-parts…

While a slow first quarter for its European automotive unit and currency headwinds should lead us to temper our 2019 expectations, we anticipate an offsetting time value of money-related adjustment will keep our valuation for narrow-moat Genuine Parts near its current $103 per share mark. As the soft results in Europe appear to be attributable mostly to transitory (weather-related) factors, our long-term targets for the firm, calling for 4% organic annual revenue growth and 7% adjusted operating…

<p>As a top distributor of automotive and industrial/electrical parts (56% and 34% of 2018 net sales, respectively), Genuine Parts benefits from industry dynamics favoring its scale-enabled service levels. We believe the firm will use its cost advantage to boost sales through its ability to offer a wide variety of parts on short order, building inventory and cost leverage as sales rise while fortifying brand value in a way subscale peers cannot economically replicate.Aftermarket auto-parts…</p>

United States

Genuine Parts Company distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials.  The Company conducts business throughout most of the United States, in Canada, and in Mexico.

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