Genuine Parts Earnings: Top-Line Results Weighed Down by Cautious End Market Demand

Narrow-moat Genuine Parts delivered lackluster second-quarter results amid softening demand across both the automotive and industrial distribution businesses. Companywide comparable sales fell 1% and segment operating margin declined 50 basis points to 9.9% (below our 10.3% estimate), mainly due to cost deleverage. With expectations for a subdued spending environment, management trimmed its fiscal 2024 guidance, which now contemplates low-single-digit top-line growth (from 3%-5% previously) and adjusted EPS in the range of $9.30-$9.50 (down from $9.80-$9.95). We plan to lower our $150 fair value estimate by a low-single-digit percentage in light of the weaker outlook.