Genuine Parts (NYSE:GPC) shareholders have earned a 23% CAGR over the last three years

Stock Analysis

It might be of some concern to shareholders to see the Genuine Parts Company (NYSE:GPC) share price down 11% in the last month. But over three years, the returns would have left most investors smiling In fact, the company's share price bested the return of its market index in that time, posting a gain of 73%.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Genuine Parts

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Genuine Parts was able to grow its EPS at 27% per year over three years, sending the share price higher. This EPS growth is higher than the 20% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Genuine Parts' earnings, revenue and cash flow.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Genuine Parts the TSR over the last 3 years was 88%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

It's nice to see that Genuine Parts shareholders have received a total shareholder return of 12% over the last year. That's including the dividend. Having said that, the five-year TSR of 13% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Genuine Parts better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Genuine Parts you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

What are the risks and opportunities for Genuine Parts?

NYSE:GPC

Genuine Parts

Genuine Parts Company distributes automotive replacement parts, and industrial parts and materials.Show more

Rewards

Trading at 12.8% below our estimate of its fair value

Earnings are forecast to grow 7.11% per year

Earnings grew by 33.9% over the past year

Risks

Has a high level of debt

Share Price

Market Cap

1Y Return

Further research onGenuine Parts

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Genuine Parts Company distributes automotive replacement parts, and industrial parts and materials.

Outstanding track record with excellent balance sheet and pays a dividend.