Foolish Forecast: Genuine News

Wall Street's closed for Good Friday tomorrow, so we're going to start the pre-weekend earnings previews a day early this week. Coming up bright and early Monday morning, Genuine Parts (NYSE: GPC) reports its Q1 2006 numbers.

What analysts say:

• Buy, sell, or waffle? Only five analysts follow Genuine Parts, but four of them rate the stock a buy. The one holdout is a hold rating.
• Revenues. Forecasts are for a 5% rise in quarterly sales to $2.45 billion.
• Earnings. Profits are predicted to do a bit better, with the consensus estimate being an 8% increase to $0.66 per share.

What management says:
Genuine Parts doesn't put out a lot of press releases. The last one of real importance was, unsurprisingly, the Q4 and full-year 2005 earnings release. In it, CEO Tom Gallagher pronounced himself "pleased with the [year's] progress" and promised "to maintain our level of revenue growth, further improve our operating margins, and continue to enhance our asset management and working capital efficiencies."

What management does:
When the CEO of a company that derives more than half its revenues and profits from the troubled auto industry pronounces himself "pleased" with what happened in 2005, you have to take notice. Remember that 2005 was the year when Delphi filed for bankruptcy and when GM (NYSE: GM) and Ford (NYSE: F) bonds got "junked." In this worst of all possible business environments, General Parts nonetheless managed to grow its revenues 8% -- including a 6% rise in automotive group revenues.

Margins also expanded over the last year, making Genuine Parts' 8% extra sales 5% more profitable last quarter than they were a year ago.

Margins %	9/04	12/04	3/05	6/05	9/05	12/05
Gross	30.9	31.1	31.2	31.3	31.4	31.3
Op.	6.9	7.0	7.0	7	7.1	7.2
Net	4.3	4.3	4.3	4.4	4.4	4.5

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
You know the saying: "Don't look a gift horse in the mouth." Consider Genuine Parts a gift horse. If this company can survive, and even grow, facing the troubles its industry is burdened with -- then investors should be thankful leaving things at that.

Improved margins and working capital management would of course be nice, but I honestly don't see that the company needs to improve here, either. Over the last six months, sales growth of 8% has exceeded both the rate of increase in accounts receivable (6%) and inventories (less than 1%.)

Competitors:

• Advance Auto Parts (NYSE: AAP)
• AutoZone (NYSE: AZO)
• CSK Auto (NYSE: CAO)
• Wal-Mart (NYSE: WMT)

AutoZone is a Motley Fool Inside Value selection. Take a free trial for Philip Durell's latest bargain stock picks.

Fool contributor Rich Smith does not own shares of any company named above.