Auto and industrial parts retailer Genuine Parts (NYSE: GPC) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 3.4% year on year to $6.16 billion. Its non-GAAP profit of $2.10 per share was 2.1% above analysts’ consensus estimates.
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Genuine Parts (GPC) Q2 CY2025 Highlights:
- Revenue: $6.16 billion vs analyst estimates of $6.11 billion (3.4% year-on-year growth, 0.9% beat)
- Adjusted EPS: $2.10 vs analyst estimates of $2.06 (2.1% beat)
- Adjusted EBITDA: $676.2 million vs analyst estimates of $533 million (11% margin, 26.9% beat)
- Management lowered its full-year Adjusted EPS guidance to $7.75 at the midpoint, a 3.1% decrease
- Operating Margin: 9%, up from 6.7% in the same quarter last year
- Free Cash Flow Margin: 1.3%, down from 2.5% in the same quarter last year
- Same-Store Sales were flat year on year (-0.9% in the same quarter last year)
- Market Capitalization: $17.19 billion
Company Overview
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $23.77 billion in revenue over the past 12 months, Genuine Parts is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, Genuine Parts likely needs to optimize its pricing or lean into international expansion.
As you can see below, Genuine Parts’s 4.7% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was sluggish.
This quarter, Genuine Parts reported modest year-on-year revenue growth of 3.4% but beat Wall Street’s estimates by 0.9%.
Looking ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months, similar to its six-year rate. We still think its growth trajectory is satisfactory given its scale and indicates the market sees success for its products.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Genuine Parts opened new stores at a rapid clip over the last two years, averaging 5.6% annual growth, much faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Note that Genuine Parts reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Genuine Parts’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. Genuine Parts should consider improving its foot traffic and efficiency before expanding its store base.
In the latest quarter, Genuine Parts’s year on year same-store sales were flat. This performance was more or less in line with its historical levels.
Key Takeaways from Genuine Parts’s Q2 Results
While revenue and EPS beat by a bit, full-year EPS guidance was lowered due to "challenging market conditions", which is a big negative. The stock traded down 3.1% to $120.02 immediately after reporting.
Is Genuine Parts an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
