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Advance Auto Parts (AAP) On Track With Transformation Plan

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On Feb 26, we issued an updated research report on Advance Auto Parts, Inc. (AAP - Free Report) .

The company is progressing well with its transformation plan of cutting down needless expenses. Also, Advance Auto Parts made key investments in technology and people to boost its value proposition.

In fourth-quarter 2017, the company accrued savings from increased productivity and cost optimization. This, in turn, resulted in an elevated gross profit. In addition, the zero-based budgeting approach also kept a lid on selling, general and administrative (SG&A) expenses. In 2018, the company intends to invest more in technology, people and e-commerce platforms.

Advance Auto Parts reported adjusted earnings of 77 cents per share in the fourth quarter of fiscal 2017 (ended Dec 30, 2017), declining from $1 in the prior-year quarter. The figure, however, beat the Zacks Consensus Estimate of 65 cents. During the quarter, the company reported revenues of $2.04 billion, beating the Zacks Consensus Estimate of $2.02 billion. Revenues were 2.2% lower than the year-ago quarter.

However, price competition is a serious concern for Advance Auto Parts. It faces competition from national and regional automotive retailers. Also, the manufacturing of better quality vehicles can affect the demand for Advance Auto Parts’ products.

Advance Auto Parts has outperformed the industry it belongs to over the last three months. The company’s shares have rallied 27.8% over the period, compared with 11.3% gain recorded by the industry.




 

Advance Auto Parts carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are General Motors Company (GM - Free Report) , Volkswagen AG and AB Volvo (VLVLY - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

General Motors has an expected long-term growth rate of 8.4%. In the past six months, shares of the company have gained 17%.

Volkswagen has an expected long-term growth rate of 18.7%. The shares of the company have risen 32.8% in the past six months.

AB Volvo has an expected long-term growth rate of 15%. In the past six months, shares of the company have rallied 12.6%.

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