Genuine Parts (GPC) shares soared 12.9% in the last trading session to close at $132.57. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock’s 19.5% gain over the past four weeks.
GPC shares jumped yesterday after reports of O’Reilly Automotive making a cash bid worth $10 billion or more for GPC’s auto-parts division. Investors are betting this move helps GPC unlock the hidden value of that unit. The deal would help Genuine Parts sharpen its focus on its industrial parts business, potentially improving margins and giving the company a cleaner, more focused growth story going forward.
This auto and industrial parts distributor is expected to post quarterly earnings of $2.10 per share in its upcoming report, which represents no change from the year-ago quarter. Revenues are expected to be $6.39 billion, up 3.6% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Genuine Parts, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on GPC going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
Genuine Parts belongs to the Zacks Automotive – Retail and Wholesale – Parts industry. Another stock from the same industry, Driven Brands Holdings Inc. (DRVN), closed the last trading session 2.6% higher at $14.47. Over the past month, DRVN has returned 10.4%.
For Driven Brands Holdings, the consensus EPS estimate for the upcoming report has changed +1.4% over the past month to $0.3. This represents a change of -16.7% from what the company reported a year ago. Driven Brands Holdings currently has a Zacks Rank of #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).
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