10 Undervalued Dividend Aristocrats to Buy According to Hedge Funds

8. Genuine Parts Company (NYSE:GPC)

Dividend Yield as of December 23: 3.46%

Number of Hedge Fund Holders: 27

P/E Ratio: 14.89

Genuine Parts Company (NYSE:GPC) specializes in distributing automotive and industrial replacement parts. Its operations are divided into two segments – Automotive Parts Group and Industrial Parts Group. The company supplies automotive parts for hybrid and electric cars, trucks, buses, motorcycles, farm vehicles, and marine equipment. Its customers include repair shops, service stations, fleet operators, auto dealers, and individual consumers. Beyond distribution, the company offers repair and assembly services such as gearbox repairs, hydraulic drive shaft repairs, and hose manufacturing. GPC boasts an exceptional streak of 68 consecutive years of dividend increases, earning its place among the top picks for the best dividend aristocrat stocks.

Genuine Parts Company (NYSE:GPC) has a rich legacy, supported by its long-standing brands like NAPA, which celebrates its 100th anniversary next year, and Motion, a leader in industrial solutions since 1946. With strong operations across Europe, Asia Pacific, Canada, and beyond, GPC positions itself as a unified team leveraging global scale to capitalize on opportunities in its fragmented industries.

GPC adjusted its 2024 outlook due to persistent weak market conditions observed in the third quarter, which impacted demand across its segments. Diluted earnings per share expectations were revised to $6.60–$6.80, down from the earlier projection of $8.55–$8.75, while adjusted EPS guidance was reduced to $8.00–$8.20 from $9.30–$9.50. The company anticipates total sales growth of 1%–2%, driven in part by acquisitions, with Automotive sales expected to grow 3%–4% and Industrial sales declining by 1%–2%.

Challenging market conditions, including inflation, high interest rates, and geopolitical uncertainty, continue to affect both the US and international automotive businesses. Despite short-term headwinds, GPC maintains strong cash flows, projecting $1.3–$1.5 billion in cash from operations and $800 million–$1 billion in free cash flow for 2024. Genuine Parts Company (NYSE:GPC) has spent $954 million on acquisitions this year, including the purchase of Walker Automotive Supply, which aligns with GPC’s balanced strategy of owning and partnering with independent stores. The company’s pension de-risking strategy also progressed, with plans to transition the US pension plan to a third-party insurer by 2025. This move, which reduces financial volatility, will have no immediate cash impact in 2024.

Insider Monkey’s third-quarter database shows that Genuine Parts Company (NYSE:GPC) was part of 27 hedge fund portfolios, down from 31 in the last quarter. Harris Associates is the largest stakeholder in the company, with 2.3 million shares worth about $325 million.