Investment Thesis
GPC faces significant operational deterioration with net income collapsing 92.7% YoY despite modest 3.5% revenue growth, indicating margin compression and underlying profitability issues. Negative free cash flow of -$33.6M combined with weak returns (ROE 4.2%, ROA 0.9%) and concerning liquidity (quick ratio 0.48x) signal financial stress in a capital-intensive business.
Strengths
- Gross margin of 37.3% remains reasonable for wholesale distribution
- Strong interest coverage ratio of 13.9x provides debt service capacity
- Moderate debt-to-equity ratio of 0.78x limits financial leverage risk
Risks
- Net income declined 92.7% YoY, indicating severe operational deterioration beyond normal cyclicality
- Negative free cash flow of -$33.6M means company is consuming rather than generating cash; CapEx of $97.6M exceeds operating cash flow of $63.9M
- Critically low quick ratio of 0.48x suggests insufficient liquid assets to cover short-term obligations
- Extremely weak returns on equity (4.2%) and assets (0.9%) indicate poor capital efficiency and capital allocation challenges
Key Metrics to Watch
- Trend in net margin recovery and source of 92.7% net income decline
- Free cash flow generation and path to positive FCF
- Quick ratio and working capital management to assess liquidity stress
Financial Metrics
Revenue
6.3B
Net Income
188.5M
EPS (Diluted)
$1.37
Free Cash Flow
-33.6M
Total Assets
21.0B
Cash
500.0M
Profitability Ratios
Gross Margin
37.3%
Operating Margin
3.9%
Net Margin
3.0%
ROE
4.2%
ROA
0.9%
FCF Margin
-0.5%
Balance Sheet & Liquidity
Current Ratio
1.09x
Quick Ratio
0.48x
Debt/Equity
0.78x
Debt/Assets
0.0%
Interest Coverage
13.87x
Long-term Debt
3.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T13:22:48.692469 |
Data as of: 2026-03-31 |
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