ISI: Genuine Parts Reports Solid 4Q Results

In a recent research report published by ISI, Genuine Parts Company

reported a favorable 4Q with positive gross margin inflection. In the report, ISI said, “Price optimization, vendor rebates, and improved purchasing are bearing fruit, with GM rate +50bps YoY in 4Q11 a clear positive. 25bps of GM rate gain in 2012 appears reasonable even if volume gains moderate to low to mid-single digits and input costs remain elevated. One caveat is that NAPA came in as 2nd highest priced in our latest pricing survey – see our 1Q survey ORLY Narrows the Gap on 2/7 for more. Price optimization is a plus for margin, but share loss in '08 and '09 was partially driven by NAPA being out of bounds on price.” ISI maintains its Hold rating and $65 PT on Genuine Parts, which closed yesterday at $63.81.