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Factors Shaping the Fate of Advance Auto Parts' (AAP) Q4 Earnings

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Advance Auto Parts, Inc. (AAP - Free Report) is scheduled to report fourth-quarter 2020 results on Feb 16, before the bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.93 per share on revenues of $2.34 billion.

This automotive aftermarket parts provider registered higher-than-anticipated earnings in the last reported quarter on solid growth in comparable store sales.

Over the trailing four quarters, Advance Auto Parts missed the Zacks Consensus Estimate on one occasion and beat in the remaining three — the average surprise being 8.04%. This is depicted in the graph below:

Advance Auto Parts, Inc. Price and EPS Surprise

Advance Auto Parts, Inc. Price and EPS Surprise

Advance Auto Parts, Inc. price-eps-surprise | Advance Auto Parts, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Advance Auto Parts’ fourth-quarter earnings per share witnessed a downward revision of one cent to $1.93 in the past 60 days. Nonetheless, this compares favorably with the year-ago quarter’s earnings of $1.64 per share, indicating a 17.7% jump, year on year. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 10.8%.

What the Zacks Model Says

Our proven model predicts an earnings beat for Advance Auto Parts this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Advance Auto Parts has an Earnings ESP of +6.53%. This is because the Most Accurate Estimate of $2.06 per share comes in 13 cents higher than the Zacks Consensus Estimate. 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 of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

Advance Auto Parts is anticipated to have gained from the expansion of its footprint through new stores and widening online presence during the fourth quarter. Markedly, the Zacks Consensus Estimate for the number of retail stores at the end of the to-be-reported quarter is pegged at 4,969, higher than the 4,877 stores reported in the prior-year quarter. In addition, the consensus mark for comparable store sales growth during the fourth quarter is pegged at 4.82%, suggesting a rise from the 0.1% witnessed in the prior-year period.

Additionally, the introduction of Advance Auto Parts’ #DieHardisBack marketing campaign on Oct 18, 2020 drove widespread traffic to the company’s stores during the soon-to-be-reported quarter. This is likely to have boosted its revenues during the December-end quarter. Also, the company’s Speed Perks 2.0 program is anticipated to have provided its employees with data insights during the quarter under review.

Further, Advance Auto Parts is undertaking several initiatives to strengthen and streamline its supply chain to meet the evolving need of customers. This is likely to have aided the company’s margins during the October-December quarter.

However, the company’s massive costs for store openings, partnerships and investments to strengthen the supply chain are likely to have flared up expenses in the to-be-reported quarter.

Other Stocks to Consider

Along with Advance Auto Parts, here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:

Allison Transmission Holdings (ALSN - Free Report) has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.

LKQ Corporation (LKQ - Free Report) has an Earnings ESP of +5.48% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 18.

Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release earnings results on Feb 19.

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