Analyzing Genuine Parts (NYSE:GPC) & LKQ (NASDAQ:LKQ)

LKQ (NASDAQ:LKQ) and Genuine Parts (NYSE:GPC) are both consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitability, analyst recommendations, earnings and institutional ownership.

Profitability

This table compares LKQ and Genuine Parts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LKQ	1.89%	9.57%	4.11%
Genuine Parts	0.12%	23.00%	4.95%

Risk & Volatility

LKQ has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Genuine Parts has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Institutional and Insider Ownership

95.6% of LKQ shares are held by institutional investors. Comparatively, 78.8% of Genuine Parts shares are held by institutional investors. 0.4% of LKQ shares are held by insiders. Comparatively, 0.1% of Genuine Parts shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares LKQ and Genuine Parts”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LKQ	$13.65 billion	0.37	$607.00 million	$1.00	20.05
Genuine Parts	$24.30 billion	0.70	$65.94 million	$0.25	491.16

LKQ has higher earnings, but lower revenue than Genuine Parts. LKQ is trading at a lower price-to-earnings ratio than Genuine Parts, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for LKQ and Genuine Parts, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LKQ	2	2	5	0	2.33
Genuine Parts	0	5	4	1	2.60

LKQ presently has a consensus target price of $26.07, suggesting a potential upside of 30.03%. Genuine Parts has a consensus target price of $145.00, suggesting a potential upside of 18.09%. Given LKQ’s higher probable upside, equities analysts clearly believe LKQ is more favorable than Genuine Parts.

Dividends

LKQ pays an annual dividend of $1.20 per share and has a dividend yield of 6.0%. Genuine Parts pays an annual dividend of $4.25 per share and has a dividend yield of 3.5%. LKQ pays out 120.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Genuine Parts pays out 1,700.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LKQ has increased its dividend for 3 consecutive years and Genuine Parts has increased its dividend for 70 consecutive years. LKQ is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

LKQ beats Genuine Parts on 10 of the 18 factors compared between the two stocks.

About LKQ

LKQ Corporation engages in the distribution of replacement parts, components, and systems used in the repair and maintenance of vehicles and specialty vehicle aftermarket products and accessories. It operates through four segments: Wholesale-North America, Europe, Specialty, and Self Service. The company distributes bumper covers, automotive body panels, and lights, as well as mechanical automotive parts and accessories; salvage products, including mechanical and collision parts comprising engines; transmissions; door assemblies; sheet metal products, such as trunk lids, fenders, and hoods; lights and bumper assemblies; scrap metal and other materials to metals recyclers; and brake pads, discs and sensors, clutches, steering and suspension products, filters, and oil and automotive fluids, as well as electrical products, including spark plugs and batteries. In addition, the company distributes recreational vehicle appliances and air conditioners, towing hitches, truck bed covers, vehicle protection products, marine electronics, cargo management products, wheels, tires, and suspension products. It serves collision and mechanical repair shops, and new and used car dealerships, as well as retail customers. The company operates in the United States, Canada, the United Kingdom, Germany, Belgium, the Netherlands, Luxembourg, Italy, the Czech Republic, Austria, Poland, Slovakia, Taiwan, and other European countries. LKQ Corporation was incorporated in 1998 and is headquartered in Chicago, Illinois.

About Genuine Parts

Genuine Parts Company distributes automotive replacement parts, and industrial parts and materials. It operates in two segments: Automotive Parts Group and Industrial Parts Group segments. The company distributes automotive replacement parts for hybrid and electric vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles, farm vehicles, small engines, farm equipment, marine equipment, and heavy duty equipment; and equipment and parts used by repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, and individuals. It also distributes industrial replacement parts and related supplies, such as abrasives, adhesives, sealants and tape, bearings, chemicals, cutting tools, electrical, facility maintenance, hose and fittings, hydraulics, janitorial, mechanical power transmission, pneumatics, process pumps and equipment, safety, seals and gaskets, and tools and testing instruments, as well as maintenance, repair, and operation customers in aggregate and cement, automotive, chemical and allied products, equipment and machinery, equipment rental and leasing, fabricated metals, food and beverage, iron and steel, lumber and wood, oil and gas, pulp and paper, and rubber products. In addition, the company provides various services and repairs comprising gearbox and fluid power and process pump assembly and repair, hydraulic drive shaft repair, electrical panel assembly and repair, hose and gasket manufacture and assembly. It operates in the United States, Canada, France, the United Kingdom, Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia, New Zealand, Mexico, Indonesia, and Singapore. The company was incorporated in 1928 and is headquartered in Atlanta, Georgia.