Sluggish European Results Don't Alter Our Long-Term Outlook for Genuine Parts; Shares Trade Fairly
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 ave...Genuine Parts is engaged in the distribution of automotive replacement parts, industrial parts, and business products. The company's reportable business segments are: Automotive, which distributes automotive parts and accessory items and provides inventory, cataloging, marketing, training and other programs to the automotive aftermarket; Industrial, which distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission products, industrial automation, and hose, among others; and Business Products, which is engaged in the wholesale distribution of a line of office and other business-related products through a customer base of resellers.
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