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Founder & CEO, Brownstone Research
The Hidden Value in Genuine Parts Company's Spin-Off Plan
Written by Jeffrey Neal Johnson. Date Posted: 2/19/2026.
Key Points
- The strategic separation of Genuine Parts' automotive and industrial businesses allows the market to finally value the high-growth industrial segment at the premium multiple it deserves.
- Shareholders can rely on a consistent income stream from this Dividend King while waiting for the corporate breakup to fully materialize over the coming year.
- Management has effectively cleared the decks of legacy financial obligations, ensuring that both new independent companies launch with clean balance sheets and strong foundations.
- Special Report: [Sponsorship-Ad-6-Format3]
History has a way of rhyming on Wall Street. When General Electric dismantled its conglomerate structure to form independent aerospace and energy companies, the market eventually cheered — unlocking billions in shareholder value by letting each business trade at its appropriate valuation. On Feb. 17, 2026, Genuine Parts Company (NYSE: GPC) signaled its intent to follow a similar playbook.
Known for decades as a steady, if somewhat staid, Dividend King, GPC announced a historic plan to separate its two primary businesses — Automotive (NAPA) and Industrial (Motion) — into independent public companies.
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That strategic pivot was immediately overshadowed by a disastrous fourth-quarter earnings report, which sent shares down roughly 14.5% in a single trading session.
For reactive traders, the headline miss was a signal to exit. But for patient value investors, the sell-off combined with the spin-off announcement has created a rare special situation.
The market appears to have discounted GPC based on backward-looking operational noise, effectively offering a high-quality industrial asset at a distressed retail price. The question isn't whether the quarter was bad — it was — but whether the punishment fits the crime given the value likely to be unlocked in 2027.
Kitchen Sink Quarter: Digesting the Bad News
To assess the opportunity, investors must first digest the issues that triggered the sell-off. GPC's fourth-quarter report was undeniably messy. Revenue came in at $6 billion, missing analyst estimates by about $60 million, while adjusted earnings per share (EPS) of $1.55 missed the $1.79 consensus.
What truly spooked the market was a GAAP net loss of $609 million. A closer look shows a classic kitchen-sink quarter — new management recognizing a cluster of non-recurring items to reset the baseline going forward.
The loss was driven primarily by two one-time charges:
- Pension settlement ($742 million): A large non-cash charge related to terminating a U.S. pension plan. Ugly on paper, this move de-risks the balance sheet and removes a volatile long-term liability ahead of the split.
- Supplier bankruptcy ($160 million): A hit from the Chapter 11 filing of First Brands Group, the parent of brands such as FRAM and Trico, reflecting uncollected vendor rebates.
Perhaps most damaging to the share price was a guidance reset. Management lowered 2026 expectations, forecasting adjusted EPS of $7.50 to $8 — well below the prior analyst consensus of roughly $8.41. Crucially, CEO Will Stengel appears intent on clearing the decks now. By recognizing these issues and lowering the bar in 2026, the company aims to launch two independent entities in 2027 with cleaner balance sheets and more attainable targets.
The Banana Split: 2 Tickers, Double the Value?
The core investment thesis rests on a sum-of-the-parts (SOTP) valuation. Today, GPC trades as a conglomerate at a blended price-to-earnings multiple of about 16.4x (based on the midpoint of the new 2026 guidance). That creates a conglomerate discount: the faster-growing Industrial business is dragged down by the slower-growing Automotive business.
The separation, targeted for Q1 2027, will create two distinct public companies:
Global Industrial (Motion)
Motion is the hidden jewel. As a distributor of industrial robotics, hydraulics and conveyance systems, it supplies critical components for reshoring American manufacturing and building out AI data centers.
- The valuation gap: Pure-play industrial distributors such as W.W. Grainger (NYSE: GWW) and Fastenal (NASDAQ: FAST) typically trade at premium multiples, often in the high-20s to low-30s P/E range.
- The opportunity: Buried inside GPC, Motion is being valued like an auto parts retailer. As a standalone, Motion's roughly $9 billion in revenue and ~13.4% EBITDA margins should justify a materially higher multiple. Even at a conservative 22x P/E — a discount to Grainger — the industrial business alone would represent a substantial portion of GPC's current enterprise value.
Global Automotive (NAPA)
The automotive business, with more than $15 billion in revenue, is the cash-generating arm. While North American margins (about 5.5%) trail leader O'Reilly Automotive (NASDAQ: ORLY), the business operates in a defensive sector supported by an aging U.S. vehicle fleet. As a standalone, the unit will face increased pressure to improve operations and narrow the margin gap with peers.
Buying GPC around ~$127 effectively means paying a discounted price for the automotive business while getting the high-multiple industrial business for a fraction of its standalone worth.
70 Years of Hikes: Income While You Wait
One risk with spin-offs is timing: the split isn't expected to close until early 2027, leaving a roughly 12-month execution window. That's where investors can lose patience. GPC, however, provides an attractive incentive to hold through the transition.
Despite the earnings chaos, the board approved a dividend increase for the 70th consecutive year, reinforcing its Dividend King status. The share-price decline has pushed the dividend yield to about 3.4%.
For context, the S&P 500 yields roughly 1.4%. GPC offers more than double that, and a yield that compares favorably to Treasury yields while leaving equity upside intact. Management projects underlying cash flow of $1 billion to $1.2 billion for 2026, which remains solid despite the Q4 accounting losses. For investors, this creates a paid-to-wait scenario: collect a steady income stream while the market adjusts to the value of the industrial spin-off.
A Special Situation Buy
The sharp market reaction to Genuine Parts Company's earnings was driven by short-term noise. The 14.5% sell-off responded to cleanup costs, pension moves and bad supplier debts, while the longer-term story centers on the planned separation.
GPC is no longer just a predictable auto-parts distributor; it is a special-situation opportunity. By splitting into two public companies, management is following a proven path to unlock shareholder value and allow the high-performing Industrial segment to trade at a premium multiple. Current market pricing appears to give little credit to the potential re-rating of the Motion business.
For investors with a 12- to 24-month horizon, the case is compelling: you acquire a top-tier industrial-technology distributor and a large automotive retail network at a conglomerate discount, with a ~3.4% dividend yield to cushion the ride. The banana split may take a year to serve, but the ingredients for a higher stock price are already on the table.
Up 135% in the Past Year, Can Cameco Continue Its Run?
Written by Jordan Chussler. Date Posted: 2/17/2026.
Key Points
- As investors continue to rotate out of tech, energy continues to dominate in early 2026 with a 21% YTD gain.
- While fossil fuels have recovered, nuclear energy is also fueling the rally as demand is forecast to double by 2040.
- After gaining 135% over the past year, analysts remain bullish on Cameco, with the stock receiving a consensus Buy rating.
- Special Report: [Sponsorship-Ad-6-Format3]
Since leading the market in 2021 and 2022, energy has been one of the S&P 500's most overlooked sectors. After stocks recovered from 2022's bear market, technology and communication services—home to five of the Magnificent Seven—have led the market each year.
Over the three years since 2022, the energy sector posted a loss of 1.3% and modest gains of 5.7% and 8.7% in subsequent years, trailing the broader market and finishing near the bottom of the 11 S&P sectors. Much of that underperformance was driven by weakening global oil demand and a multi-year supply surplus.
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I predicted the 1987 crash six weeks early. I called the fall of the Berlin Wall. I pinpointed the exact bottom in 2009.
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Bloomberg is calling it "the biggest listing of ALL TIME."
A $1.5 TRILLION valuation... the "wealth-building" moment of the decade.
Today, I'll show you how to get in before the big announcement.
But since the Nasdaq hit its all-time high on Oct. 29, 2025, investors have shifted away from higher-risk, higher-volatility tech stocks toward lower-risk defensive sectors. That ongoing flight to safety—fueled by concerns about a broader correction in AI and software stocks—has coincided with surging natural gas prices, which has benefited the energy sector.
As a result, the sector has posted a roughly 21% year-to-date (YTD) gain in 2026. While that bounce has largely been attributed to fossil fuels, one often-overlooked segment has helped energy outpace the rest of the S&P 500: nuclear energy stocks.
The Nuclear Revival Propelling Cameco
Much of the recent buzz around a nuclear-energy renaissance focused on pre-revenue firms working on small modular reactors (SMRs) or nuclear-fuel technologies.
Companies like NuScale (NYSE: SMR) and Oklo (NYSE: OKLO) (SMR manufacturers) and Lightbridge (NASDAQ: LTBR) (a nuclear fuel tech firm) grabbed headlines as the push to power AI data centers took center stage. During that period those stocks skyrocketed; Oklo, for example, rose more than 521% between May and October 2025.
When those names later pulled back as investors locked in gains, the nuclear sector's established players continued a steadier ascent. Cameco (NYSE: CCJ), the world's largest publicly traded uranium producer, is one such example. The stock is up nearly 15% YTD and gained about 136% over the past year as rising uranium demand favored companies with established operations, resilient supply chains, and reliable customers.
Founded in 1988 through a merger of the Saskatchewan Mining Development Corporation and Eldorado Nuclear Limited, Cameco's market capitalization has grown to roughly $49.25 billion. With global uranium demand forecast to rise about 28% by 2030 and to more than double from current levels by 2040, the company remains a leading participant in the nuclear industry.
Those strengths were on display when Cameco reported full-year and Q4 2025 results on Feb. 13.
Cameco's Q4 Double Beat Is Indicative of the Path Forward
Last week, Cameco announced earnings and revenue that beat analyst expectations on both the top and bottom lines. Quarterly earnings per share (EPS) of $0.36 easily surpassed estimates of $0.29, while revenue of nearly $875 million—up 1.5% year-over-year—beat forecasts of about $782 million.
This was Cameco's second EPS beat in three quarters after missing expectations in seven of the prior eight quarters. The results suggest the company may have turned a corner, which could set the stage for further upside as global uranium demand increases.
Key takeaways from Cameco's most recent earnings call show the company executing a disciplined contracting strategy. By the end of 2025, Cameco had roughly 230 million pounds of long-term commitments, including about 28 million pounds per year for the next five years.
The strategy also involves intentionally preserving uncommitted supply to capture higher prices as demand strengthens.
Additionally, the company's partnership with Westinghouse and a related U.S. government initiative—backed by at least $80 billion—are progressing. Cameco expects its share of Westinghouse's adjusted EBITDA to be roughly $370 million to $430 million in 2026.
These developments are part of why institutional investors are broadly bullish on the stock.
What Wall Street Thinks of Cameco
Based on 16 analysts covering Cameco, the stock carries a consensus Buy rating with an average 12-month price target north of $131, implying more than 16% potential upside.
Institutional ownership exceeds 70%, with 733 buyers outnumbering 464 sellers over the past year. Buying activity in Q2, Q3, and Q4 2025 was the strongest in three years.
At the same time, Wall Street's bears appear to be largely staying away from CCJ.
Current short interest is 1.62% of the float—about 17.27% lower than a month earlier—and represents fewer than 7 million shares of the roughly 435.5 million shares outstanding.
According to TradeSmith, Cameco's financial health is in the Green Zone, where it has remained for more than two months.
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