Genuine Parts Co (GPC)

Conclusion

Genuine Parts Co distributes automotive and industrial replacement parts through its North American, international and industrial segments, including under the NAPA brand. At 125.65 USD on 9 November 2026, the market capitalisation is 17.3 billion USD and the enterprise value is 23.4 billion USD.

The verdict is fair. The fair value band runs from 90.66 to 135.99 USD with a midpoint of 113.32 USD, giving a margin of safety of -9.8% at the current price. The DCF gives 107.40 USD per share, and the fair value from historical multiples is 119.24 USD. Price to free cash flow of 22.7 is close to its ten-year median of 21.5, but the P/E of 558.0 against a median of 21.0 and the EV/EBITDA of 31.6 against 14.0 reflect very weak earnings. The reverse DCF implies growth of 8.1% a year, against revenue growth of 8.0% over five years, while free cash flow per share has fallen 25.1% a year over the same period.

The strongest numbers are five-year free cash flow conversion of 95.0%, a share count that has fallen 0.8% a year, and a current ratio of 1.22. The weakest are interest coverage of 0.93x, net debt to EBITDA of 8.2x, and ROIC of 1.5% against a WACC of 7.8%.

Financial health

Financial strength is red: the current ratio of 1.22 helps, but net debt to EBITDA of 8.2x and interest coverage of 0.93x pull it down. The quick ratio is 0.36 and debt to equity is 1.47, and operating earnings cover interest less than once. The Altman Z-score is 2.25, in the grey zone; the Altman model was designed for manufacturers, and this company is a distributor, so the reading should be treated with caution. Insolvency risk: medium, about 4.3% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, supported by five-year free cash flow conversion of 95.0% and a share count that fell 0.8% a year. Trailing free cash flow conversion of 24.6x is not a clean read, because net income is close to zero (net margin 0.1%). The accrual ratio is -4.1%, and stock-based compensation is 0.22% of revenue, leaving free cash flow after it at 706.1 million USD. The Piotroski score is 5 of 9. The Beneish M-score is not available. The company beat estimates in five of the last eight quarters, with an average surprise of -0.4%. Estimate revisions are negative: five cuts to the current-year estimate in the last 30 days, and for next year four cuts against one raise.

Profitability

Profitability is red. The gross margin of 36.4% is above its ten-year median of 34.4%, but the operating margin of 4.0% is below its median of 6.2%, and the net margin of 0.1% is below its median of 4.2%. Operating margin stability is 11.4%. ROIC is 1.5% against a WACC of 7.8%, giving a ROIC minus WACC of -6.2%; the five-year median ROIC is 20.2%. Return on equity of 0.7% is the product of a 0.27% net margin, an asset turnover of 1.17x and an equity multiplier of 4.70x, so leverage is doing much of the work behind a thin margin.

Growth

Growth is yellow. Revenue compound growth is 3.2% over three years, 8.0% over five and 4.8% over ten, and revenue rose in 9 of the last 10 years. Earnings per share fell at a compound rate of 61.5% over three years and 20.4% over ten. Free cash flow per share fell 27.5% a year over three years, 25.1% over five and 7.9% over ten. Consensus expects earnings per share to grow 7.3% next year.

Valuation

Valuation is yellow. Against their ten-year medians, the P/E is 558.0 against 21.0 with a premium of 25.6165 as reported, and EV/EBITDA is 31.6 against 14.0 with a premium of 1.2607. Price to free cash flow is 22.7 against 21.5 (premium 0.0538), price to sales is 0.68 against 0.90 (premium -0.2363), and price to book is 3.73 against 4.57 (premium -0.1852). The DCF gives 107.40 USD per share, using a discount rate of 8.9%, 7.25% growth in the first stage and 2.5% terminal growth. The fair value band from 90.66 to 135.99 USD is built on fixed assumptions, including a 5% equity risk premium and capped growth, and it is not a price target. The reverse DCF implies 8.1% growth, set against the figures above. Dividend yield is 3.3%, forward yield 3.4%, and the payout is 75.7% of free cash flow.

Risks

The interest coverage of 0.93x means current earnings do not cover interest, and net debt of 8.2x leaves little room for a further fall in earnings. ROIC of 1.5% below a WACC of 7.8% means growth at current returns does not create value. Falling estimates and a free cash flow per share decline of 25.1% over five years would weaken the case further, and the Altman grey zone adds uncertainty. The Beneish M-score is not available. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the mix of earnings across businesses cannot be assessed here.