Solid Third Quarter at Genuine Parts Despite Unsettled Economic Environment; Shares Seem Rich

Our $141 fair value estimate for narrow-moat Genuine Parts should not change much after the firm posted solid third-quarter earnings despite an unsteady economic backdrop. The automotive and industrial units are showing resilience consistent with our view that Genuine Parts has durable competitive advantages, and our long-term forecast still assumes mid-single-digit annual revenue growth rates and high-single-digit operating margins over the next decade. Still, we suggest investors seek a more attractive entry point as the shares seem to be priced with little room for execution error.