Genuine Parts (NYSE:GPC) is one of those $8 billion companies you occasionally come across and can't believe you haven't heard of -- until you take a closer look at what it does. NAPA auto parts, industrial parts, wholesale office supplies, electrical supply: These kinds of boring businesses can occasionally offer investors superior returns. But in this Fool's opinion, Genuine Parts' latest numbers show a company that's already trading at the right price.
I've broken out the basics on the latest full-year numbers here. The short story is that revenues increased 7.5%, while earnings ticked upward to $437 million, or $2.50 a share. That's an 11.1% increase over last year's tally, powered by steady, incremental margin gains across the board.
Revenue and earnings growth was also spread across the business segments fairly evenly, with a few notable adjustments where underperforming units were being trimmed. The Johnson Industries operations, for example, are incurring wind-down costs for downsizing.
There are certainly no fireworks here. That's not surprising given the company's competition, from Ford (NYSE:F) to GM (NYSE:GM), AutoZone (NYSE:AZO) to Wal-Mart (NYSE:WMT), and loads of smaller, regional players in its many business segments.
Therein lies the problem with GPC's shares. While this year's cash flow drop has a reasonable explanation in additional pension pitch-ins, it's hard to find a reason to buy this stock. I have to assume some pretty generous cash-flow growth to justify today's price, and even then, I get no margin of safety. I like the business -- just drop me a line when it gets cheap.
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For related Foolishness:
- A Genuine Performance?
- Genuine Parts Add up to Success
- See Genuine Parts' Q4 and FY 2005 by the numbers.
Seth Jayson likes boring biz, but only when it's a bargain. At the time of publication, he had no positions in any firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.
