Why Genuine Parts Company Is a Royally Good Buy Right Now

Key Points

• Genuine Parts Company offers a value and yield uncommon among Dividend Kings in 2025.
• It is positioning for renewed growth and may accelerate before the end of the year. 
• Institutional activity spiked in Q1 2025 as the stock price hit long-term lows, signaling a bottom for the market. 

Genuine Parts Company NYSE: GPC is a Dividend King worth buying in 2025 because its stock is trading at long-term lows, the stock has value relative to peers, and the dividend is at the high end of the historical range. Trading near $120, this stock pays more than 3.0% and can be expected to continue growing its annual payout because of its business and financial health; it is good for long-term investment. 

Genuine Parts Company has been reorganizing and repositioning since 2023. It is on track to sustain its low single-digit growth pace in 2025 and may even accelerate business. The repositioning includes focusing on technology, expanding into new categories, and improving customer accessibility and satisfaction. 

Genuine Parts Company Invests in Growth for 2025

Genuine Parts Company had a decent fiscal fourth quarter, with results reflecting the impact of growth efforts and positioning. The $5.8 billion in net revenue was up 3.3% compared to the prior year, accelerating sequentially and outperforming the consensus estimate. Growth was driven by acquisitions, which contributed 3.2% and are expected to drive organic growth in 2025. Acquisitions were compounded by an FX tailwind and an extra day, offset by declining comps. The comp decline is worrisome but slim at 0.5%. This is due to weakness in the company's Industrial segment, and offset by growth in its Automotive segment.

The margin news was also good. The company posted an expected margin decline but less than forecasted by consensus figures reported by MarketBeat. The net result is adjusted earnings of $1.61, positive free cash flow, and guidance for improvement in 2025. 

The guidance for 2025 was mixed. Revenue targets include organic growth in both segments and align with the consensus of a 3% increase, but the earnings targets are weak. Earnings, while sufficient to sustain balance sheet health and capital return, are forecasted below the consensus, which is negative for the stock price action. However, the cash flow outlook may be more important. Earnings, at best, will be flat compared to 2024, but free cash flow is forecast to grow by a double-digit amount and improve the company’s financial flexibility. 

Genuine Parts company’s cash flow and balance sheet reflected the impact of its acquisitions and repositioning efforts, which include reduced cash and increased liability. However, the cash reduction and increased liability were offset by increased assets, steady equity, and the ability to pay down the debt while returning capital to shareholders. The capital return is primarily the dividend but includes share repurchases that reduce the count incrementally each year, about 1% in F2024. 

Institutional Buying of GPC Stock Spikes in Q1

Institutional investors are buying the stock in Q1 and helping to put a floor in the market. Their activity has been bullish on balance since Q4 2023 and ramped to a new high in 2025. The institutional activity in the first six weeks of 2025, when GPCs stock price hit long-term lows, spiked to a multiyear high dating to before 2020, netting 4% of the stock. Analysts' sentiment also suggests a bottom for this market, rating it as a hold and forecasting a 15% upside at the consensus estimate. 

The stock price action is suggestive. The market hit bottom in late 2024 and has since trended sideways, confirming support at the $115 level. The market is pulling back following the guidance update but remains above the critical support level, aligning with the recent trend. The sideways action could continue indefinitely, but analysts' targets and the outlook for business growth suggest otherwise. The long-term outlook is positive regardless of where the stock price ends in 2025 because of the value, yield, and share repurchases.