Genuine Parts Company (0IUX.L) QQ3 2025 Results: Revenue Growth Amid Margin Pressure in the Automotive & Industrial Aftermarket
Executive Summary
Genuine Parts Company delivered a solid top-line performance in Q3 2025, with revenue of $6.26 billion, up 4.86% year over year and 1.55% sequentially. Gross profit rose 6.5% YoY to approximately $2.341 billion, translating to a gross margin of 37.40%. However, operating income and net income declined versus the prior year period, with operating income down 7.9% YoY and 20.9% QoQ to about $334.3 million, and net income down 0.18% YoY to $226.2 million (QoQ -11.3%). Diluted earnings per share were $1.62, up from prior limitations but down 10.9% QoQ to $1.63 (reported). This combination indicates a margin headwind despite healthier top-line growth, underscoring ongoing cost dynamics and mix effects within the portfolio.
The company maintains a strong balance sheet and cash flow profile, supported by an interest-coverage ratio of 8.29x and a payout ratio around 63.3%, with free cash flow per share of $1.73 and cash per share of $3.10. Liquidity is adequate but not overwhelming (current ratio 1.14, quick ratio 0.51; cash ratio 0.05). The working capital cycle remains elongated (days of inventory ~135; days of receivables ~38; days payable ~140; cash conversion cycle ~33 days), reflecting a capital-intensive distribution business with substantial inventory and supplier terms.
Strategically, Genuine Parts benefits from a diversified revenue base across Automotive Parts Group and Industrial Parts Group, scale advantages in North America and select international markets, and a track record of dividend discipline. Near-term performance will hinge on managing cost inflation, optimizing portfolio mix, and sustaining cash flow generation to fund dividends and potential buybacks, while pursuing opportunities in higher-growth aftermarket categories and international expansion.
Key Performance Indicators
Revenue
6.26B
QoQ: 1.55% | YoY:4.86%
Gross Profit
2.34B
37.40% margin
QoQ: 0.73% | YoY:6.50%
Operating Income
334.29M
QoQ: -20.89% | YoY:-7.88%
Net Income
226.17M
QoQ: -11.26% | YoY:-0.18%
EPS
1.63
QoQ: -10.93% | YoY:0.00%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $6.260B in Q3 2025, YoY +4.86%, QoQ +1.55%
Balance sheet and liquidity:
- Current ratio: 1.137; Quick ratio: 0.511; Cash ratio: 0.046
- Total debt to capitalization: 0.572; Long-term debt to capitalization: 0.439; Debt ratio: 0.309; Debt/equity: 1.337
- Interest coverage: 8.29x
Efficiency and cash flow:
- DSO: 37.95 days; DIO: 134.90 days; DPO: 140.10 days; CCC: 32.75 days
- Free Cash Flow per Share: $1.725; Cash Flow per Share: $2.46; Cash per Share: $3.10
- Dividend payout ratio: 63.3%; Dividend yield: 0.74%
Valuation and relative positioning:
- Price to earnings: 21.31x; Price to book: 4.03x; Price to sales: 3.08x
- Enterprise value multiple: 54.94x
YoY/QoQ context:
- Revenue growth supported by the Automotive and Industrial parts services, but operating income compression suggests rising cost pressures or mix effects as revenue expands.
- Margin dynamics indicate gross margin stability with modest compression versus the prior period; operating margin decline reflects higher operating expenses and other costs.
- The company’s earnings cadence remains steady, but near-term profitability hinges on cost control and portfolio optimization.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.26B
4.86%
1.55%
Gross Profit
2.34B
6.50%
0.73%
Operating Income
334.29M
-7.88%
-20.89%
Net Income
226.17M
-0.18%
-11.26%
EPS
1.63
0.00%
-10.93%
Key Financial Ratios
currentRatio
1.14
grossProfitMargin
37.4%
operatingProfitMargin
5.34%
netProfitMargin
3.61%
returnOnAssets
1.09%
returnOnEquity
4.73%
debtEquityRatio
1.34
operatingCashFlowPerShare
$2.46
freeCashFlowPerShare
$1.73
dividendPayoutRatio
63.3%
priceToBookRatio
4.03
priceEarningsRatio
21.31
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings transcript data provided in the input. Consequently, there are no management quotes available to extract key themes or quotes. If a transcript becomes available, the highlights could cover themes such as cost discipline, portfolio mix, channel strategy (e-commerce vs. traditional distribution), and geographic expansion plans.
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Forward Guidance
Explicit forward guidance for QQ4 2025 or full-year 2025 was not included in the provided data. In the absence of formal targets, the forward-looking assessment is anchored in the observed operating dynamics and sector context. Key factors to monitor include:
- Margin trajectory: with gross margin around 37.4% and operating margin near 5.3%, sustaining or improving margins will depend on cost control, favorable mix (Automotive vs Industrial), and supplier terms.
- Cash generation: free cash flow per share of $1.725 and a dividend payout around 63% suggest a policy of steady cash returns; focus on working capital optimization and capex discipline to support ongoing distributions.
- Balance sheet strength: debt/capitalization around 0.57 and interest coverage of 8.3x imply ample capacity for modest growth investments or share repurchases, should management authorize.
- Market dynamics: autos aftermarket demand, fleet maintenance cycles, and international expansion (UK/Europe, other regions) will influence top-line resilience; ongoing competition from online channels could pressure margins and channel mix.
Overall: The qualitative outlook supports continued cash generation and a modest growth profile, with the caveat that margin headwinds and macro volatility could temper near-term earnings momentum.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0IUX.L Focus
37.40%
5.34%
4.73%
21.31%
0L9E.L
30.50%
9.70%
1.03%
45.50%
0R33.L
47.70%
19.90%
2.95%
31.97%
0J8W.L
43.10%
26.50%
34.20%
16.67%
0JQQ.L
7.11%
2.68%
0.08%
399.59%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
GPC remains a durable cash-generating franchise with a conservative balance sheet and an attractive dividend, supported by a diversified revenue mix and broad geographic reach. The Q3 2025 results show topline resilience (YoY revenue +4.9%), but profitability faces near-term pressure from cost and mix despite a robust gross margin. The stock’s valuation (P/E ~21x, P/B ~4x) reflects quality and cash-return characteristics, yet upside hinges on margin expansion, continued cash flow delivery, and strategic portfolio optimization. Investors should monitor margin recovery momentum, working capital efficiency ( CCC dynamics ), international expansion progress, and any management signaling regarding capital allocation, including potential buybacks or strategic acquisitions. Overall, the medium-term thesis remains constructive, albeit with a cautious eye on margin sustainability and macro-driven volatility.
Key Investment Factors
Growth Potential
Growth potential anchored in the durable aftermarket demand for automotive and industrial components, plus international expansion opportunities and e-commerce channel growth.
Profitability Risk
Key risks include continued margin compression from input costs and mix, macroeconomic fluctuations impacting auto repair demand, currency headwinds in international operations, and intensified competition from online and discount parts retailers.
Financial Position
Solid but not aggressive balance sheet: debt to capitalization around 0.57 with strong interest coverage (8.29x), robust free cash flow per share ($1.73), and a sustainable dividend policy (payout ~63%).
SWOT Analysis
Strengths
Leading US-based automotive and industrial parts distributor with diversified segments (Automotive Parts Group and Industrial Parts Group)
Extensive and established distribution network with a trusted brand and customer relationships
Healthy cash generation and a sustainable dividend policy supporting shareholder returns
Weaknesses
Margin pressure from cost inflation and mix effects impacting operating income
Relatively elongated working capital cycle (DIO ~135 days, CCC ~33 days) indicating capital-intensive inventory and supplier terms