Insider buying can provide investors with clues in relation to a stock’s future direction. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to look at some insider buying at Genuine Parts Company (GPC:US). Genuine Parts is an American company that specializes in the distribution of automotive replacement parts, industrial replacement parts, and electrical/electronic materials. The company operates in 14 countries including the US, Canada, the UK, Germany, Australia, and China. It is listed on the New York Stock Exchange and currently has a market capitalization of $18.0 billion.
Genuine Parts Company: Insider Buying
Our insider transaction data shows that on 13 August, board member John Holder bought 2,000 GPC shares at a price of $124.93 per share. This trade cost the insider a total of $249,860 and increased his holding to 17,482 shares.
This trade is worth highlighting for a couple of reasons. Firstly, Mr. Holder has spent a considerable amount of money on shares. This suggests he is very bullish on the stock’s future prospects.
Secondly, our records show that Mr. Holder has made a number of well-timed purchases in the recent past. In mid-December, for example, he picked up 1,000 shares at a price of $97 per share. Since then, the stock has traded as high as $136.
2021 Guidance Upgraded
In July, Genuine Parts Company posted a strong set of second-quarter results.
For the period, sales amounted to $4.8 billion, a 25.1% increase on the figure of $3.8 billion posted in the same period of 2020. The company's adjusted net income from continuing operations was $252.6 million, an increase of 33% on the $190.5 million figure posted in Q2 2020. On a per share diluted basis, adjusted net income from continuing operations was $1.74, an increase of 32% year on year. The group’s Automotive segment generated the strongest growth, with record sales and double-digit sales comps in each region of its operations.
“The second quarter was highlighted by strong sales trends, gross margin gains and improved operational efficiencies that drove margin expansion and record quarterly earnings,” commented Chairman and CEO Paul Donahue. "Our 25% total sales growth reflects the benefits of a strengthening global economy and positive sales environment in both our Automotive and Industrial businesses," he added.
On the back of these strong results, Genuine Parts Company upgraded its full-year guidance. It now expects total sales growth of 10% to 12% for 2021 (versus previous guidance of 5% to 7%) and adjusted diluted earnings per share of $6.20 to $6.35 (versus previous guidance of $5.85 to $6.05).
In light of this guidance upgrade, we see the insider buying here as a bullish indicator.