A month has gone by since the last earnings report for Advance Auto Parts (AAP Quick QuoteAAP - Free Report) . Shares have lost about 0.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Advance Auto Parts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Advance Auto Parts’ Q2 Earnings Top

Advance Auto Parts reported adjusted earnings of $3.4 per share for second-quarter 2021 (ended Jul 17, 2021), jumping 15.3% from the prior-year figure. The reported figure also beat Zacks Consensus Estimate of $2.95 on higher-than-expected comps growth. For the second quarter, comparable store sales witnessed 5.8% growth as against the consensus mark of a fall of 1.1%.

Advance Auto Parts generated net revenues of $2,649.4 million, marginally topping the Zacks Consensus Estimate of $2,614 million. Moreover, the revenue figure increased 5.9% from the year-ago reported figure.

Adjusted operating income went up 7% year over year to $302 million. Adjusted selling, general and administrative expenses totaled $926.4 million compared with the $817.7 million witnessed in the year-ago period.

Financial Position

Advance Auto Parts had cash and cash equivalents of $809.3 million as of Jul 17, 2021 compared with $834.9 million as of Jan 2, 2021. Total long-term debt was $1,033.7 million as of Jul 17, 2021, slightly up from the $1,033 million as of Jan 2, 2021.

For the reported quarter, operating cash flow was $446.3 million compared with the year-ago quarter’s of $437.3 million. Free cash flow (FCF) for the second quarter came in at $387.6 million compared with the year-ago quarter’s FCF of $380.2 million.

Dividend & Share Repurchase

On Aug 10, Advance Auto Parts’ board approved a cash dividend of $1 per share. The dividend would be payable on Oct 1 to all common shareholders of record as of Sep 17, 2021. It also approved an additional buyback program of $1 billion. During the quarter, the company repurchased around 2 million shares for $393 million at an average price of $197.52 per share.

Advance Auto Parts returned a record $457.9 million to shareholders through buybacks and dividend during the reported quarter. At the end of second-quarter 2021, the company had $868.8 million remaining under the share-repurchase program.

Store Update

As of Jul 17, it operated 4,748 stores and 215 Worldpac branches in the United States, Canada, Puerto Rico and U.S. Virgin Islands. It also serves 1,306 independently-owned Carquest-branded stores across these locations, in addition to Mexico, the Bahamas, Grand Cayman, Turks and Caicos, and British Virgin Islands.

Guidance for 2021

Advance Auto Parts has updated the full-year 2021 view. It now projects full-year net sales of $10.6-$10.8 billion, up from the previous forecast of $10.4-$10.6 billion. Comparable store sales growth and adjusted operating income margin are now envisioned in the band of 6-8% and 9.2-9.4%, respectively, higher from the previous outlook of 4-6% and 9-9.2%, respectively.

The company expects FCF of minimum $700 million, up from the previous forecast of minimum $575 million. However, it intends to open 80-120 stores this year, lower than the previous projection 100-150 stores.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Advance Auto Parts has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Advance Auto Parts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.