GENUINE PARTS CO. $91

GENUINE PARTS CO. $91 (New York symbol GPC; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $13.7 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.9%; TSINetwork Rating: Average; www.genpt.com) gets 52% of its sales and 57% of its earnings by selling replacement auto parts: Genuine operates 1,100 outlets under the NAPA banner, and its distribution business serves 4,900 independent stores in North America, Australia and New Zealand. The company also sells industrial parts (30% of sales, 27% of earnings), office products (13%, 11%) and electrical equipment (5%, 5%). In 2015, Genuine’s overall sales fell 0.4%, to $15.28 billion from $15.34 billion in 2014. Leaving out currency exchange rates, sales rose 2.5%, due to acquisitions (up 1%) and higher growth at its existing businesses (up 1.5%). Earnings fell 0.8%, to $705.7 million from $711.3 million. Genuine spent $292.3 million on share buybacks in 2015, so earnings per share rose 0.4%, to $4.63 from $4.61. Recently, the company raised its dividend by 6.9%. The new annual rate of $2.63 a share yields 2.9%. Genuine has now increased that rate each year for the past 60 years. The company’s sound balance sheet should allow it to continue buying back shares and increasing its dividend. Genuine’s long-term debt of $250.0 million is a low 2% of its market cap, and it holds cash of $211.6 million. The stock trades at 19.1 times the $4.76 a share it will probably earn in 2016. That’s a reasonable p/e, particularly as low gas prices should spur car owners to drive more and so boost sales of replacement parts such as brakes. Genuine Parts is a buy.

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