Whether you do it yourself or go to a garage for help, every vehicle owner has been exposed to the myriad of parts a vehicle needs to keep running smoothly. Let’s take a look at Genuine Parts Company (GPC), a multi-billion dollar provider of auto parts (largest component of sales) in addition to electrical, industrial, and office products throughout Australasia, Canada, Mexico, and the U.S.

Key takeaways from the above trend analysis:

1. Top line growth has been modest but positive over the past five years…a combination of both organic and M&A activities as the Company continues to grow and act as consolidator in still fragmented industries.
2. Gross margin trend was flat…disappointing but still good on an absolute basis
3. Effective management and good cost control led to increased operating profits across the Company.
4. Double-digit EPS growth with virtually zero impact from share buybacks.
5. DPS increasing ~7.5% annually over the past five years (Company had paid a dividend every year since going public in 1948 and 2015 marks its 59th consecutive year of rising dividends).
6. While down from 2009, CFO continues to be strong and amounted to nearly $800M in 2014.
7. Significant positive trend (and absolute value) in coverage ratio mitigates modest jump in debt.

While not glamorous, the industries served by GPC are pretty resilient and not likely to experience drastic change or obsolescence.

GPC is currently trading at 18 times TTM earnings and carries a dividend yield of ~ 2.4%. While not cheap by a P/E measure, I believe GPC has more room to run:

1. Despite the market for new cars being cyclical, auto parts are pretty much recession proof…wipers still need to be replaced, filters need to changed etc.
2. The Company’s other operating segments benefit from both new business and replacement / renewal purchasing.
3. There is still room for consolidation and possibly expansion into new markets.

What do you think of Genuine Parts Company as a long-term investment?