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Genuine Parts (GPC) is heading lower following its Q4 report this morning. The company missed EPS expectations, while revenue was in line, increasing 4.1% yr/yr to $6.01 bln. Additionally, its FY26 guidance did not reignite much enthusiasm, with adjusted EPS of $7.50-8.00 below consensus and total sales growth of 3-5.5%, implying $25.0-25.6 bln, roughly in line with expectations. However, GPC also announced plans to split into two publicly traded companies, separating its Automotive Parts Group and Industrial Parts Group, sharpening focus on the growth initiatives in each business.

• Global Automotive will become a pure-play auto aftermarket parts/solutions platform led by NAPA, focused on expanding in the commercial do-it-for-me channel while continuing its technology and supply-chain transformation to drive share gains and margin improvement.
• Global Industrial will be built around Motion, an MRO/solutions distributor, with growth supported by acquisitions and secular tailwinds like reshoring, automation, and AI-infrastructure demand.
• In Q4, North America Automotive sales increased 2.4% yr/yr to $2.3 bln, driven by +1.7% comp growth, as U.S. sales and comps were up about 2%.
• Commercial comps rose about 3.5% on continued strength in auto-care and major accounts, while retail comps declined low single digits and discretionary categories stayed softer.
• International Automotive sales increased 6.4% yr/yr to $1.5 bln, with Asia-Pacific sales and comps both up about 5%, while Europe softened throughout the quarter, with sales down 2% and comps -3%.
• Industrial sales increased 4.6% yr/yr to $2.2 bln, driven by a +3.4% comp, as Motion benefited from solid MRO demand, with growth in 9 of 14 end markets and December the strongest month.
• While adj. gross margin expanded 70 bps to 37.6%, the EPS miss largely reflected weaker-than-expected Europe and U.S. independent owner sales, and ongoing D&A, interest, and lost pension income headwinds.
• FY26 guidance calls for NA and International Auto sales growth of 3-5% and 3-6%, respectively, and Industrial growth of 3-6%, alongside 40-60 bps of adj. gross margin expansion, though remains cautious on Europe near term.

Briefing.com Analyst Insight

It seems like a prudent decision for GPC to split its Automotive Parts and Industrial businesses so each can be more focused on growth, with Global Automotive around NAPA's commercial opportunity and technology and supply-chain upgrades, and Motion around capturing secular industrial demand trends. That said, the selloff reflects a particularly lackluster finish to FY25 and a FY26 guide that failed to excite. GPC missed expectations and guidance assumes only modest market conditions, with profitability still facing company-specific headwinds from higher D&A, interest expense, and lost pension income, alongside ongoing inflation pressure. On the demand side, GPC continues to see weakness in retail and more discretionary categories. There are some offsets, including a supportive aging vehicle parc, echoing peer AutoZone (AZO), and the company noted a strong start to 2026 led by Motion, but for now the guide suggests those tailwinds may take time to translate into better earnings traction. Longer term, the split could help clarify the path to improved execution and returns, but investors will likely want more concrete separation details and segment targets as GPC approaches its 2H26 investor day and the expected Q1 2027 completion.