Sterne Agee Initiates Coverage On Genuine Parts Company

Sterne Agee initiated coverage Thursday on Genuine Parts Company GPC with a Neutral rating.

According to analysts Ali Faghri and Michael Ward, “The secular shift to the faster growing and larger [Do-It-For-Me (DIFM)] segment favors companies with a strong commercial focus.”

“GPC is a leading distribution company and derives 75 percent of their automotive sales from DIFM and has a 9.5 percent market share of the segment, the highest in the peer group. GPC operates 64 domestic NAPA automotive parts distribution centers located in 41 states.” according to Faghri.

The report noted that “GPC has historically traded at a forward P/E multiple of 15.4x. Relative to our 2015 EPS estimate, GPC is trading at 20.0x.

“On an EV/EBITDA basis, GPC is currently trading at 10.3x our 2015 EBITDA estimate, above its historical average of 8.4x.”

Faghri concluded, “GPC's leading brand, historical performance, solid balance sheet, and consistent returns to shareholders have traditionally been cited as reasons to justify a premium multiple for the stock...current market prices are already reflecting most of growth opportunities and fully discounting our 2015 estimates.”

Genuine Parts Company recently traded at $100.35, down 0.19 percent.