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Why Is Advance Auto Parts (AAP) Down 5.3% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Advance Auto Parts Inc (AAP - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Advance Auto Parts Misses on Q4 Earnings, Beats Sales
Advance Auto Parts reported a decline in adjusted earnings to $1.00 per share in the fourth quarter of fiscal 2016 (ended Dec 31, 2016) from $1.22 earned in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $1.09. Adjusted net earnings declined to $125.6 million from $157.6 million in the fourth quarter of fiscal 2015.
Revenues improved 2.5% year over year to $2.08 billion and surpassed the Zacks Consensus Estimate of $2.01 billion. The year-over-year rise in the top line was due to growth in comparable store sales and a Worldpac branch opening, partly offset by store closures and Carquest store consolidations. Comparable store sales grew 3.1% in the reported quarter as against a decline of 2.5% recorded a year ago.
Gross profit declined to $907.6 million or 43.6% of sales in the reported quarter from $909.2 million or 44.7%, recorded a year ago. The decrease in gross profit margin can be attributed to supply chain expenses and headwinds related to inventory level reductions.
Adjusted selling, general and administrative (SG&A) expenses totaled $781.9 million or 37.5% of sales in the quarter under review, compared with $751.6 million or 37% in the fourth quarter of fiscal 2015. The rise in SG&A was due to continued investments in customer service initiatives.
Comparable operating income rose 5.4% to $106.1 million from $100.7 million in the prior-year quarter. Adjusted operating margin was 6% as against the 7.7% figure recorded a year ago.
Full-Year 2016
For full-year 2016, Advance Auto Parts reported adjusted earnings of $7.15 per share, down from $7.82 reported in 2015. The figure also missed the Zacks Consensus Estimate of $7.24. Operating income in the year fell 4.6% to $787.6 million.
Revenues in 2016 were $9.57 billion, down from the $9.74 billion earned in 2015. However, revenues surpassed the Zacks Consensus Estimate of $9.5 billion.
Dividend
On Feb 15, 2017, the board of directors of Advance Auto Parts declared a regular quarterly dividend of $0.06 per share, payable on Apr 7, 2017, to stockholders on record as of Mar 24, 2017.
Financial Position
Advance Auto Parts had cash and cash equivalents of $135.2 million as of Dec 31, 2016, reflecting an increase from $90.8 million as of Jan 2, 2016. Total long-term debt was $1.04 billion as of Dec 31, 2016, compared with $1.21 billion as of Jan 2, 2016.
During the 52-week period ended Dec 31, 2016, operating cash flow was $500.9 million compared with $689.6 million in the year-ago period. Free cash flow in the said period amounted to $241.3 million compared with $454.9 million in the prior-year period. Capital expenditures amounted to $259.6 million compared with $234.7 million a year ago.
Store Update
Advance Auto Parts enhances profits through its continued focus on store expansion. As of Dec 31, 2016, the company’s total store count was 5,189, including 127 Worldpac branches. Advance Auto Parts served roughly 1,250 independently owned Carquest stores as of that date.
Outlook
For full-year 2017, Advance Auto Parts expects adjusted operating income margin to improve 0.15-0.35%. The company also expects to open 75-85 new stores, including Worldpac branches.
Capital expenditure for the year is projected to be roughly $250 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.6% due to these changes.
At this time, Advance Auto Parts' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is Advance Auto Parts (AAP) Down 5.3% Since the Last Earnings Report?
A month has gone by since the last earnings report for Advance Auto Parts Inc (AAP - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Advance Auto Parts Misses on Q4 Earnings, Beats Sales
Advance Auto Parts reported a decline in adjusted earnings to $1.00 per share in the fourth quarter of fiscal 2016 (ended Dec 31, 2016) from $1.22 earned in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $1.09. Adjusted net earnings declined to $125.6 million from $157.6 million in the fourth quarter of fiscal 2015.
Revenues improved 2.5% year over year to $2.08 billion and surpassed the Zacks Consensus Estimate of $2.01 billion. The year-over-year rise in the top line was due to growth in comparable store sales and a Worldpac branch opening, partly offset by store closures and Carquest store consolidations. Comparable store sales grew 3.1% in the reported quarter as against a decline of 2.5% recorded a year ago.
Gross profit declined to $907.6 million or 43.6% of sales in the reported quarter from $909.2 million or 44.7%, recorded a year ago. The decrease in gross profit margin can be attributed to supply chain expenses and headwinds related to inventory level reductions.
Adjusted selling, general and administrative (SG&A) expenses totaled $781.9 million or 37.5% of sales in the quarter under review, compared with $751.6 million or 37% in the fourth quarter of fiscal 2015. The rise in SG&A was due to continued investments in customer service initiatives.
Comparable operating income rose 5.4% to $106.1 million from $100.7 million in the prior-year quarter. Adjusted operating margin was 6% as against the 7.7% figure recorded a year ago.
Full-Year 2016
For full-year 2016, Advance Auto Parts reported adjusted earnings of $7.15 per share, down from $7.82 reported in 2015. The figure also missed the Zacks Consensus Estimate of $7.24. Operating income in the year fell 4.6% to $787.6 million.
Revenues in 2016 were $9.57 billion, down from the $9.74 billion earned in 2015. However, revenues surpassed the Zacks Consensus Estimate of $9.5 billion.
Dividend
On Feb 15, 2017, the board of directors of Advance Auto Parts declared a regular quarterly dividend of $0.06 per share, payable on Apr 7, 2017, to stockholders on record as of Mar 24, 2017.
Financial Position
Advance Auto Parts had cash and cash equivalents of $135.2 million as of Dec 31, 2016, reflecting an increase from $90.8 million as of Jan 2, 2016. Total long-term debt was $1.04 billion as of Dec 31, 2016, compared with $1.21 billion as of Jan 2, 2016.
During the 52-week period ended Dec 31, 2016, operating cash flow was $500.9 million compared with $689.6 million in the year-ago period. Free cash flow in the said period amounted to $241.3 million compared with $454.9 million in the prior-year period. Capital expenditures amounted to $259.6 million compared with $234.7 million a year ago.
Store Update
Advance Auto Parts enhances profits through its continued focus on store expansion. As of Dec 31, 2016, the company’s total store count was 5,189, including 127 Worldpac branches. Advance Auto Parts served roughly 1,250 independently owned Carquest stores as of that date.
Outlook
For full-year 2017, Advance Auto Parts expects adjusted operating income margin to improve 0.15-0.35%. The company also expects to open 75-85 new stores, including Worldpac branches.
Capital expenditure for the year is projected to be roughly $250 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.6% due to these changes.
Advance Auto Parts Inc Price and Consensus
Advance Auto Parts Inc Price and Consensus | Advance Auto Parts Inc Quote
VGM Scores
At this time, Advance Auto Parts' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.