Genuine Parts Earnings: Top-Line Growth Normalizing, but Shares Rise on Solid Margins and Outlook

Narrow-moat Genuine Parts delivered mixed first-quarter results as expanding segment margins (up 30 basis points to 9.4%) helped offset lackluster demand across its automotive and industrial distribution businesses. Despite the weak top line—sales growth of 1% excluding currency impacts underperformed our 2.8% forecast—the shares soared over 10% as management reaffirmed its full-year outlook for low-single-digit comparable sales growth and adjusted earnings per share of $9.80-$9.95, which lands closely in line with our expectations. We expect to see sequential top-line improvement as annual comparisons are bound to ease, leaving our outlook mostly intact. We plan to modestly raise our $146 fair value estimate due to the time value of money and a slight increase in our segment margin forecast.