AZO AutoZone Inc

Genuine Parts Company (GPC) posted a 16% rise in profit to $146.3 million or 93 cents per share in the first quarter of 2012 from $126.5 million or 80 cents in the same quarter of last year. With this, the auto parts maker outdid the Zacks Consensus Estimate by 7 cents per share.

Sales in the quarter grew 7% to $3.2 billion, which was in line with the Zacks Consensus Estimate. The improvement was attributable to strong sales in mainly Automotive and Industrial segments. Operating profit rose 5% to $690.9 million in the quarter from $656.8 million a year ago, driven by higher gross profits.

Sales in the Automotive segment grew 6% to $1.5 billion driven by the positive impact from sales initiatives and improving fundamentals in the automotive industry. Sales in the Motion Industries or Industrial segment scaled up 12% to $1.1 billion, making it the best performing segment, driven by internal strategies and a recovery in the economy.

Sales in the EIS or Electrical segment inched up 5% to $147.1 million with the recovery of the manufacturing sector of the economy. However, sales in the S. P. Richards or Office Products segment declined 1.5% to $426.2 million due to challenging environment in the office products industry.

Genuine Parts had cash and cash equivalents of $424.4 million as of March 31, 2012, down from $465.9 million as of March 31, 2011. Long-term debt remained unchanged at $500 million as of March 31, 2012 compared with the year-ago level.

In the quarter, the company’s net cash flow from operations improved significantly to $172.3 million from $53.4 million in the prior-year, due to an improvement in profit and favorable changes in operating assets and liabilities. Meanwhile, capital expenditures increased to $16.9 million from $14.5 million in the first quarter of 2011.

Genuine Parts has undertaken various initiatives to boost sales and earnings, such as product line expansion, penetration into new markets and cost-saving activities. The company relies on a diverse product portfolio for top-line and bottom-line growth. Its major competitors include Advance Auto Parts (AAP), AutoZone (AZO) and W.W. Grainger (GWW).

Currently, the company retains a Zacks #2 Rank on its stock, which translates to a Buy rating for the short term (1–3 months).

 
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GRAINGER W W (GWW): Free Stock Analysis Report
 
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