It has been about a month since the last earnings report for Advance Auto Parts (AAP Quick QuoteAAP - Free Report) . Shares have added about 12.5% in that time frame, outperforming 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 catalysts.

Advance Auto Parts’ Q4 Earnings & Sales Rise Y/Y

Advance Auto Parts reported adjusted earnings of $1.87 per share in fourth-quarter 2020 (ended Jan 2, 2021), up 14% from the prior-year figure. The reported figure, however, lagged the Zacks Consensus Estimate of $1.93 on lower-than-expected comps growth. During the fourth quarter, comparable store sales increased 4.7% year on year. However, the reported figure marginally missed the consensus mark of 4.82%.

Advance Auto Parts generated net revenues of $2,365.1 million, topping the Zacks Consensus Estimate of $2,340 million. Moreover, the revenue figure increased 12% from the year-ago quarter reported figure.

Adjusted operating income climbed 14.6% year over year to $171.8 million. Adjusted selling, general and administrative (SG&A) expenses totaled $913.5 million compared with the $779 million witnessed in the year-ago quarter.

Financial Position

Advance Auto Parts had cash and cash equivalents of $835 million as of Jan 2, 2021, compared with $418.7 million as of Dec 28, 2019. Total long-term debt was $1,033 million as of Jan 2, 2021, compared with $747.3 million as of Dec 28, 2019.

Operating cash flow was $969.7 million as of Jan 2, 2021, up from the $866.9 million as of Dec 5 28, 2019. Free cash flow as of Jan 2, 2021 came in at $702.1 million, up from the $596.8 million as of 28, 2019.

Dividend & Share Repurchase

On Feb 10, Advance Auto Parts’ board approved a cash dividend of 25 cents per share to be paid on Apr 2, to all common shareholders of record as of Mar 19, 2021.

During the reported quarter, the company returned $319.9 million to shareholders through the share-repurchase program. At the end of the fourth quarter, the company had $432.2 million remaining under the share-repurchase program.

Store Update

As of Jan 2, the company operated 4,806 stores and 170 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also serves 1,277 independently-owned Carquest branded stores across these locations, in addition to Mexico, the Bahamas, Turks and Caicos and British Virgin Islands.

Outlook for 2021

Advance Auto Parts projects full-year 2021 net sales of $10.1-$10.3 billion. Comparable store sales growth and adjusted operating income margin are envisioned in the band of 1-3% and 8.7-8.9%, respectively. The company expects free cash flow of minimum $600 million. It intends to open 50-100 stores this year.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Advance Auto Parts has a nice Growth Score of B, a grade with the same score on the momentum front. 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.