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Advance Auto Parts is challenged by declining cash flows. During the 52-week period end on Dec 31, 2016, operating cash flow was $500.9 million, down from $689.6 million in the year-ago period. Free cash flow in the fiscal 2016 amounted to $241.3 million, also lower than $454.9 million in the prior-year period. Capital expenditures amounted to $259.6 million, higher than $234.7 million a year ago. This is not expected to improve in the first-quarter.
Price competition remains a concern for Advance Auto Parts, as it competes with national and regional automotive retailers such as AutoZone, O’Reilly Automotive, Pep Boys and CSK Auto Corporation.
The improvement in the quality of new vehicles leads to reduced need for maintenance and repair of parts. This in turn, impedes demand in the automotive maintenance market. In addition, the fact that consumers are opting for new vehicle purchases instead of maintaining old ones, can adversely affect the company products’ demand.
Advance Auto Parts has underperformed the Zacks categorized Retail/Wholesale-Auto Parts industry over the last six months. The company’s shares have lost 11.8% over this period, as against an 8.23% decline recorded by the industry.
Earnings Whispers
Our proven model does not conclusively show that Advance Auto Parts is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Advance Auto Parts’ Earnings ESP is -1.42%. This is because the Most Accurate estimate is $2.09 whereas the Zacks Consensus Estimate stands at $2.12. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Advance Auto Parts carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Wabash National Corporation (WNC - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #3.
Meritor Inc. has an Earnings ESP of +2.33% and a Zacks Rank #3.
Zacks’ 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks’ radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential! This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already showing jaw-dropping growth. Download this IPO Watch List today for free >>
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Will Advance Auto Parts (AAP) Disappoint in Q1 Earnings?
Advance Auto Parts Inc. (AAP - Free Report) ) is expected to report its first-quarter fiscal 2017 results before the market opens on May 24.
Last quarter, the company delivered a negative earnings surprise of 8.26%. Let’s see how things are shaping up prior to the impending announcement.
Advance Auto Parts Inc Price and EPS Surprise
Advance Auto Parts Inc Price and EPS Surprise | Advance Auto Parts Inc Quote
Factors to Consider
Advance Auto Parts is challenged by declining cash flows. During the 52-week period end on Dec 31, 2016, operating cash flow was $500.9 million, down from $689.6 million in the year-ago period. Free cash flow in the fiscal 2016 amounted to $241.3 million, also lower than $454.9 million in the prior-year period. Capital expenditures amounted to $259.6 million, higher than $234.7 million a year ago. This is not expected to improve in the first-quarter.
Price competition remains a concern for Advance Auto Parts, as it competes with national and regional automotive retailers such as AutoZone, O’Reilly Automotive, Pep Boys and CSK Auto Corporation.
The improvement in the quality of new vehicles leads to reduced need for maintenance and repair of parts. This in turn, impedes demand in the automotive maintenance market. In addition, the fact that consumers are opting for new vehicle purchases instead of maintaining old ones, can adversely affect the company products’ demand.
Advance Auto Parts has underperformed the Zacks categorized Retail/Wholesale-Auto Parts industry over the last six months. The company’s shares have lost 11.8% over this period, as against an 8.23% decline recorded by the industry.
Earnings Whispers
Our proven model does not conclusively show that Advance Auto Parts is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Advance Auto Parts’ Earnings ESP is -1.42%. This is because the Most Accurate estimate is $2.09 whereas the Zacks Consensus Estimate stands at $2.12. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Advance Auto Parts carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Navistar International Corporation has an Earnings ESP of a positive 12.5% and holds a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wabash National Corporation (WNC - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #3.
Meritor Inc. has an Earnings ESP of +2.33% and a Zacks Rank #3.
Zacks’ 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks’ radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential! This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already showing jaw-dropping growth. Download this IPO Watch List today for free >>