Genuine Parts Shock Separation Plan Creates Once-in-a-Decade Opportunity

GPC -3.84%

Quick Read

• Genuine Parts (GPC) plans to separate into two independent companies (NAPA automotive and Motion industrial) by Q1 2027.

• Genuine Parts reported a $609M net loss driven by $825M in one-time charges including pension settlements and vendor bankruptcy.

• Genuine Parts raised its dividend for the 70th consecutive year despite adjusted EPS falling to $7.37 from $8.16.

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Genuine Parts (NYSE: GPC) reported Q4 2025 revenue of $6.01 billion, up 4.1% from $5.77 billion in the prior year. However, the automotive and industrial parts distributor posted a GAAP net loss of $609 million, or $(4.39) per share, compared to net income of $133 million in Q4 2024. Adjusted EPS came in at $1.55, falling short of the $1.836 consensus estimate and declining from $1.61 in the prior-year period.

Shares plunged over 12% Tuesday morning, but the stock was still up 4.6% year to date.

Major Strategic Shift

Overshadowing the earnings miss, GPC announced plans to separate into two independent public companies—Global Automotive (NAPA) and Global Industrial (Motion)—in a tax-free transaction expected to complete in Q1 2027. CEO Will Stengel framed the move as a natural evolution: "Creating two focused, independent companies sharpens customer and market alignment, increases clarity and speed, simplifies operations and enables disciplined, business-specific investments to unlock long-term value."

The separation aims to provide each business with dedicated management teams and capital allocation strategies suited to their distinct markets. GPC operates across 17 countries with more than 10,800 locations, addressing a combined $350 billion addressable market.

One-Time Charges Weigh on Results

The quarterly loss stemmed from $825 million in after-tax non-recurring charges, including a $742 million pension settlement charge related to terminating the U.S. qualified defined benefit plan, $160 million in credit losses from key vendor First Brands' Chapter 11 bankruptcy, and $103 million in asbestos liability remeasurement.

For full-year 2025, sales reached $24.3 billion, up 3.5%, while adjusted EPS of $7.37 declined from $8.16 in 2024. Free cash flow totaled $421 million.

2026 Outlook and Dividend

GPC guided 2026 total sales growth of 3% to 5.5% with adjusted EPS of $7.50 to $8.00. The company also raised its quarterly dividend 3.2% to $1.0625 per share, marking its 70th consecutive annual increase.

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