A month has gone by since the last earnings report for Advance Auto Parts (AAP Quick QuoteAAP - Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Advance Auto Parts due for a pullback? 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 drivers.

Advance Auto Parts’ Q3 Earnings & Sales Rise Y/Y

Advance Auto Parts reported reported adjusted diluted earnings of $2.81 per share in third-quarter 2020 (ended Oct 3, 2020), substantially up 33.8% from the prior-year figure. The reported figure also beat the Zacks Consensus Estimate of $2.63.

Advance Auto Parts generated net revenues of $2,541.9 million, surpassing the Zacks Consensus Estimate of $2,478 million. Additionally, the revenue figure increased 9.9% from the year-ago quarter reported figure.

During the third quarter, comparable store sales increased 10.2% year on year as well as topped the consensus mark of 5.88%.

Adjusted operating income jumped 32.6% year over year to $271.9 million. Adjusted selling, general and administrative (SG&A) expenses totaled $856.7 million compared with the $809.9 million witnessed in the year-ago quarter.

Advance Auto Parts continues to refrain from providing the 2020 guidance given the uncertainties related to the full impact of the COVID-19 pandemic.

Financial Position

Advance Auto Parts had cash and cash equivalents of $1,068.2 million as of Oct 3, 2020, compared with $418.7 million as of Dec 28, 2019. Total long-term debt was $1,031.9 million as of Oct 3, 2020, compared with $747.3 million as of Dec 28, 2019.

Operating cash flow was $809.2 million as of Oct 3, 2020, up from the $708.5 million as of Oct 5, 2019. Free cash flow generated during the reported quarter came in at $308.5 million, up from the $158.6 million generated in the prior-year period.

Dividend & Share Repurchase

On Oct 6, Advance Auto Parts’ board approved a cash dividend of 25 cents per share to be paid on Jan 4, to all common shareholders of record as of Dec 18, 2020.

During the reported quarter, the company repurchased 0.7 million shares of its common stock at an aggregate cost of $109.6 million, or an average price of $153.06 per share. At the end of the third quarter, the company had $752.2 million remaining under the share-repurchase program.

Store Update

As of Oct 3, 2020, the company operated 4,811 stores and 168 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also serves 1,269 independently-owned Carquest branded stores across these locations in addition to Mexico, the Bahamas, Turks and Caicos and British Virgin Islands.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Advance Auto Parts has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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.