Genuine Parts CompanyGPC

Morningstar Rating

Stock Research and Analysis

by David Manger

Genuine Parts has developed an extensive distribution network and strong customer relationships. We think its ability to maintain wide-ranging inventories and deliver cost-effective products in the shortest amount of time has allowed the company to Read more

Bulls Say

Genuine Parts has the advantage of return privileges with most of its suppliers, which reduces the risk of inventory obsolescence.

The company's automotive segment should benefit from its trusted NAPA brand and an increase in the average age (roughly10 years), number, and size of vehicles on the road.

After finally ridding itself of the ill-fated Johnson Industries acquisition (an attempt to enter the market for distribution of parts used by dealerships to service vehicles under manufacturers' warranties) in 2008, the firm should begin to see profit margins in the automotive segment return to historical levels.

In Genuine Parts' automotive segment, one distribution center supplies around 100 NAPA Auto Parts stores, while competitor O'Reilly Automotive has only one distribution center for approximately every 180 parts stores. Read more

Bears Say

Extended vehicle warranties or maintenance offered on new vehicles could reduce demand for replacement parts.

Rising gas prices typically are correlated with a decline in passenger miles driven, which in turn reduces demand for repair and maintenance services.

During periods of rising prices, distributors' margins can suffer if they are unable to pass on price increases to customers.

In the office product industry, powerful retail chains have begun skipping the middleman and direct-sourcing from manufacturers, in turn eliminating Genuine Parts' role in the supply chain. Read more

Strategy

Genuine Parts is adding to its auto-parts store base internally, while acquiring established maintenance, repair, and operation companies for the industrial segment. The company strives to provide product Read more

Management

Thomas Gallagher took over as CEO of Genuine Parts in August 2004 after having served as COO since 1990. In 2005 he was appointed as chairman. Having held executive positions in the company for nearly two decades, Gallagher has significant industry Read more

Profile

Incorporated in 1928, Genuine Parts is a distributor of automotive and industrial replacement parts, electrical/ electronic materials, and office products. The company has Read more

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