GPC 141.91 (+0.48%)
US3724601055Retail - CyclicalSpecialty Retail

Last update on 2024-06-06

Genuine Parts (GPC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Genuine Parts (GPC) achieves a Piotroski F-Score of 6 out of 9 for 2023, indicating moderate financial health and profitability based on 9 key criteria.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 6

We're running Genuine Parts (GPC) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is used to assess the financial strength of a company, with a score ranging from 0 to 9. Genuine Parts Company (GPC) has a score of 6, indicating a relatively strong financial position. Key findings: 1. Profitability: GPC has a consistently positive net income and cash flow from operations, although ROA slightly declined. 2. Liquidity: Positive changes in the current ratio, but a slight increase in leverage. 3. Operating Efficiency: Improvement in gross margin, but a decrease in the asset turnover ratio.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 6, Genuine Parts Company (GPC) is in a relatively strong financial position but has some areas that require caution, such as declining ROA and increasing leverage. For investors, this is a stock worth considering, especially if they value consistent profitability and good cash flow. However, they should keep an eye on the company's asset efficiency and debt levels.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Genuine Parts (GPC)

Company has a positive net income?

The Net Income criterion is an essential gauge of a company's profitability. A positive net income over a period signifies that the company is legitimately making money after all expenses are considered.

Historical Net Income of Genuine Parts (GPC)

For the year 2023, Genuine Parts Company (GPC) reported a net income of $1,316,524,000, which is a significant positive figure. This indicates a healthy profitability. Over the past 20 years, GPC has consistently maintained positive net income figures, albeit with a few fluctuations. Importantly, 2023 shows the highest net income within this period. The singular exception of a negative net income during 2020, at -$29,102,000, was likely an anomaly caused by the global COVID-19 pandemic. Therefore, GPC earns 1 point under this criterion, reaffirming its robust financial health and resilience in maintaining profitability over a long period.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash generated or used by a company in its primary business activities. Positive CFO indicates healthy operational revenue and efficiency.

Historical Operating Cash Flow of Genuine Parts (GPC)

Genuine Parts Company (GPC) has achieved a Cash Flow from Operations (CFO) of $1,435,610,000 in 2023, which is positive, thus earning it 1 point in this criterion. This positive trend in 2023 signifies the company's robust operational performance and ability to generate adequate cash from its core activities to cover its operating expenses. Reviewing the last 20 years of CFO data, one can notice a general upward trend, particularly post-2018, where CFO surged past $1 billion, reaching a peak of $2,019,561,000 in 2020. While there have been fluctuations, the consistent growth highlights Genuine Parts Company's resilience and stability in generating cash flow through its primary business functions.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company’s efficiency in generating profits from its assets. A higher ROA indicates better asset utilization.

Historical change in Return on Assets (ROA) of Genuine Parts (GPC)

In 2023, Genuine Parts (GPC) reported an ROA of 0.0764, slightly declining from an ROA of 0.0767 in 2022. This downward trend results in 0 points for the ROA criterion. Considering long-term data, GPC's ROA has fluctuated but remains significantly below the industry median ROA. Therefore, this declining pattern is not favorable.

Operating Cashflow are higher than Netincome?

Why it is important for Operating Cash Flow to be higher than Net Income?

Historical accruals of Genuine Parts (GPC)

Operating Cash Flow for Genuine Parts (GPC) in 2023 stands at 1,435,610,000 USD whereas the Net Income is 1,316,524,000 USD. The fact that Operating Cash Flow is higher than Net Income is a positive sign, indicating stronger liquidity and cash generation. Genuine Parts (GPC) scores a 1 on this criterion, suggesting efficient cash management.

Liquidity of Genuine Parts (GPC)

Leverage is declining?

The Change in Leverage criterion evaluates whether a company has managed to reduce its leverage over the most recent fiscal year. Lower leverage typically indicates lower risk and better financial health.

Historical leverage of Genuine Parts (GPC)

In 2022, Genuine Parts (GPC) had a leverage ratio of 0.2372, which increased slightly to 0.2522 in 2023. This upward trend in leverage indicates a higher reliance on debt in its capital structure, which could present increased financial risk. Historical data further showcase the company's leverage fluctuations over the past 20 years, with the latest increase marking a departure from a period of relative stability between 2020 and 2022. Given that the leverage has increased in 2023, Genuine Parts does not earn a point for this criterion.

Current Ratio is growing?

The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity and financial health.

Historical Current Ratio of Genuine Parts (GPC)

Genuine Parts Company's (GPC) current ratio slightly increased from 1.1471 in 2022 to 1.2273 in 2023. This improvement of 7% suggests that GPC has become moderately better at covering its short-term liabilities with its short-term assets. While this is a positive trend, it's notable that GPC's current ratio remains below the industry median of 1.55 for 2023. Historically, GPC's current ratio has been declining from highs of around 3.36 in the early 2000s to its current level, reflecting possible changes in financial strategy or operational dynamics. Thus, the trend is good for the given criterion as the ratio increased, and it earns a point.

Number of shares not diluted?

The criterion evaluates whether the number of outstanding shares has decreased compared to the previous year. This is important as a decrease may indicate share buybacks, signaling management's confidence in the company's future potentiel.

Historical outstanding shares of Genuine Parts (GPC)

Comparing the outstanding shares of 141,468,000 in 2022 to 140,367,000 in 2023, we see a reduction in outstanding shares. This decrease results in a positive signal according to the Piotroski criteria, adding 1 point to the score. Historically, Genuine Parts (GPC) has consistently reduced its outstanding shares over the past two decades, peaking at 175,660,000 shares in 2004 and reaching a low of 140,367,000 in 2023. This long-term commitment to share reduction underscores management's confidence and is generally viewed favorably by investors.

Operating of Genuine Parts (GPC)

Cross Margin is growing?

Change in Gross Margin (GM) measures if a company is improving profitability, calculated as (Revenue - Cost of Goods Sold) / Revenue. Improvement over years can signal better cost control or pricing power.

Historical gross margin of Genuine Parts (GPC)

The Gross Margin for Genuine Parts (GPC) increased from 0.3503 in 2022 to 0.359 in 2023. This 0.87 percentage point increase is a positive sign, implying enhanced efficiencies in managing costs of goods sold. When compared on a larger temporal scale, focusing on the last two decades, GPC's Gross Margin has advanced from 0.3104 (2003) to 0.359 (2023), reflecting a robust upward trajectory. Additionally, it's crucial to compare GPC's performance with the industry median. The industry median Gross Margin was 0.3785 in 2023, indicating GPC is still trailing behind the industry standard. Still, its improvement denotes visible progress. Hence, for this criterion, GPC gets 1 point. This uptick in profitability metrics may imply better operational efficiency or strategic pricing, both beneficial for long-term stakeholders.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It's calculated as Sales divided by Total Assets.

Historical asset turnover ratio of Genuine Parts (GPC)

Comparing the Asset Turnover ratio of 1.34 in 2023 to 1.4326 in 2022 for Genuine Parts Company (ticker: GPC), there is a decrease. This decrease signifies less efficiency in generating sales from its assets. Trends over the past 20 years show a general decline from 2.0769 in 2003 to 1.34 in 2023. Therefore, the criterion for Asset Turnover for 2023 receives 0 points.


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