Will Genuine Parts (GPC) beat estimates again in the next earnings report?

If you’re looking for a stock that has a solid history of beating earnings estimates and is well-positioned to continue the trend in its next quarterly report, you should consider Genuine Parts (GPC). This company, which operates in the Zacks Automotive – Spare Parts industry, shows potential for another earnings beat.

Looking at the last two reports, this automotive and industrial parts distributor has had a strong streak of beating earnings estimates. Over the last two quarters, the company has exceeded estimates by an average of 6.92%.

For the most recent reported quarter, Original Parts posted earnings of $2.14 per share versus the Zacks Consensus Estimate of $2.02 per share, representing a surprise of 5.94%. For the previous quarter, the company was expected to post earnings of $1.90 per share and it actually produced earnings of $2.05 per share, delivering a surprise of 7.89%.

For genuine parts, estimates are trending upwards, thanks in part to a history of earnings windfalls. And if you look at the positive Zacks Earnings ESP (Expected Surprise Estimate), it is a great indicator of future earnings growth, especially when combined with the solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks in this combination, the number of stocks that beat the consensus could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is the Zacks Consensus version, which is defined in terms of change. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Right now, Genuine Parts’ ESP is +0.79%, which suggests analysts have become optimistic about its near-term earnings potential. When we combine the positive Earnings ESP with the stock’s Zacks Rank #2 (Buy), it shows that another rally is likely just around the corner. The company’s next earnings report is expected to be released on July 20, 2023.

For the Earnings ESP metric, remember that a negative value reduces its predictive power; however, a negative earnings ESP does not mean a loss of earnings.

Many companies end up beating consensus EPS estimates, though that’s not the only reason their shares rise. Additionally, some stocks may remain stable even if they fall short of consensus estimates.

For this reason, it is very important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Use our Earnings ESP filter to find the best stocks to buy or sell before they report.

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