Core Insights - Genuine Parts and S&P Global are highlighted as potential investment opportunities due to their current undervaluation and strong dividend histories, despite recent market challenges [1] Genuine Parts (GPC) - Genuine Parts plans to split into two independent companies by Q1 2027, which is expected to unlock value and enhance long-term performance [1] - The stock is down approximately 4% year-to-date, with a consensus price target of $145.67 per share, indicating a potential upside of about 23% from its recent close near $118 [1] - Following a Q4 earnings miss, where adjusted EPS was $1.55 against estimates of $1.82, the stock dropped roughly 15% [1] - The company forecasts adjusted EPS of $7.50 to $8.00 for 2026, with expected sales growth of 3% to 5.5% [1] - Genuine Parts has maintained a 5% compounded annual growth rate (CAGR) in dividends over the past decade, indicating reliability as an income stock [1] S&P Global (SPGI) - S&P Global shares have declined about 20% year-to-date, with a consensus price target of $566 per share suggesting a potential upside of roughly 35% from its close near $417 [1] - The decline is attributed to fears of AI disruption in the software-as-a-service sector, impacting the company's earnings guidance for 2026 [1] - Despite these concerns, S&P Global's competitive advantages in credit ratings and major indices provide a strong foundation for resilience [1] - Analysts project a 12% CAGR for EPS over the next five years, alongside an 11% dividend CAGR over the last decade, indicating potential for recovery [1]

Core Viewpoint - Genuine Parts Company announced its intent to separate into two independent publicly traded companies, focusing on its Global Automotive and Global Industrial businesses, which will allow each to pursue distinct growth strategies and enhance shareholder value [1][7][8]. Business Performance - Total sales for Genuine Parts Company in 2025 reached $24.3 billion, an increase of over $800 million or 3.5% compared to 2024, with gross margin expansion for the third consecutive year [14][15]. - The Global Automotive segment is positioned as a pure-play automotive aftermarket replacement parts provider, targeting a $200 billion addressable market, with significant opportunities due to the aging vehicle population [9][10]. - The Global Industrial segment, represented by Motion, serves over 180 end markets and operates in a $150 billion global market, focusing on profitable sales growth and improving EBITDA margins [11][12]. Strategic Initiatives - The company conducted a strategic review in 2025, leading to the decision to separate its automotive and industrial businesses to maximize shareholder value and operational focus [7][8]. - The separation is expected to be tax-free for shareholders and is targeted for completion in 2027, with further updates on governance and financial profiles to follow [13]. Financial Outlook - For 2026, the company expects diluted earnings per share to range from $6.10 to $6.60, with adjusted diluted earnings per share projected between $7.50 and $8.00, reflecting a 5% increase at the midpoint compared to 2025 [53]. - Total sales growth is anticipated to be between 3% and 5.5%, with specific segment growth expectations of 3% to 5% for North America Automotive and 3% to 6% for International Automotive and Industrial segments [54][55]. Market Conditions - The company faced challenges in 2025 due to tariffs, global trade policies, and a cautious consumer environment, but managed to deliver growth and expand gross margins [14][15]. - Market conditions in Europe were particularly weak, impacting sales, while the U.S. market showed some resilience with strong sales growth in company-owned stores [36][38]. Operational Efficiency - The company achieved approximately $175 million in benefits from global restructuring initiatives in 2025, exceeding initial expectations [15][49]. - Adjusted gross margin for the fourth quarter was 37.6%, an increase of 70 basis points year-over-year, driven by strategic pricing and sourcing initiatives [47].