Critical Survey: Genuine Parts (NYSE:GPC) & Pool (NASDAQ:POOL)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pool	7.40%	32.74%	10.91%
Genuine Parts	0.13%	22.59%	4.94%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Pool and Genuine Parts, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pool	2	6	5	0	2.23
Genuine Parts	0	5	3	1	2.56

Pool currently has a consensus price target of $235.67, indicating a potential upside of 25.69%. Genuine Parts has a consensus price target of $147.86, indicating a potential upside of 11.96%. Given Pool’s higher probable upside, research analysts clearly believe Pool is more favorable than Genuine Parts.

Volatility and Risk

Pool has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, Genuine Parts has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Valuation and Earnings

This table compares Pool and Genuine Parts”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pool	$5.29 billion	1.29	$406.40 million	$10.87	17.25
Genuine Parts	$25.07 billion	0.73	$65.94 million	$0.25	528.26

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

Institutional and Insider Ownership

99.0% of Pool shares are held by institutional investors. Comparatively, 78.8% of Genuine Parts shares are held by institutional investors. 3.0% of Pool 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, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Pool pays an annual dividend of $5.20 per share and has a dividend yield of 2.8%. Genuine Parts pays an annual dividend of $4.25 per share and has a dividend yield of 3.2%. Pool pays out 47.8% of its earnings in the form of a dividend. 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. Pool has raised its dividend for 15 consecutive years and Genuine Parts has raised its dividend for 70 consecutive years. Genuine Parts is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Pool beats Genuine Parts on 12 of the 18 factors compared between the two stocks.

About Pool

Pool Corporation distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally. The company offers maintenance products, including chemicals, supplies, and pool accessories; repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps, and lights; and building materials, such as concrete, plumbing and electrical components, functional and decorative pool surfaces, decking materials, tiles, hardscapes, and natural stones for pool installations and remodeling. It also provides pool equipment and components for new pool construction and the remodeling of existing pools; irrigation and related products, such as irrigation system components, and professional turf care equipment and supplies; commercial products, including heaters, safety equipment, commercial decking equipment, and commercial pumps and filters. In addition, the company offers fiberglass pools, and hot tubs and packaged pool kits comprising walls, liners, braces, and coping for in-ground and above-ground pools; and other pool construction and recreational products comprising discretionary recreational and related outdoor living products, such as grills and components for outdoor kitchens. It serves swimming pool remodelers and builders; specialty retailers that sell swimming pool supplies; swimming pool repair and service businesses; irrigation construction and landscape maintenance contractors; and commercial pool operators and pool contractors. Pool Corporation was incorporated in 1993 and is headquartered in Covington, Louisiana.

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.